High 5 Income Tax Planning

Question 1

true or false?

alimony received is included in gross income

Answer 1

true

Question 2

the employer portion of self employment tax is deductible ____ AGI, also known as a(n) ____ deduction

Answer 2

for ; above the line

Question 3

true or false?

alimony paid is deductible by the payor

Answer 3

true

Question 4

true or false?

child support is included in gross income of the receiver

Answer 4

false

Question 5

true or false?

child support is deductible by the payor

Answer 5

false

Question 6

self employed health insurance is deductible ___ AGI, also know as a(n) ____ deduction

Answer 6

for ; above the line

Question 7

student loan interest is a(n) ____ deduction

Answer 7

above the line

Question 8

true or false?

the employee share of self employment tax is deductible

Answer 8

false, the employer share is deductible not the employee share

Question 9

true or false?

alimony paid is an itemized deduction

Answer 9

false, alimony is an above the line deduction

Question 10

if AMT is ___ than regular tax, the difference is added to the tax return

Answer 10

higher

Question 11

true or false?

education credits are refundable

Answer 11

false, they are nonrefundable

Question 12

true or false?

the foreign tax credit is nonrefundable

Answer 12

true

Question 13

true or false?

the American opportunity tax credit is fully refundable

Answer 13

false, only 40%

Question 14

what is more advantageous a tax credit or a deduction?

Answer 14

tax credit

Question 15

true or false?

the lifetime learning credit is refundable

Answer 15

false, none of it is

Question 16

what credits would you want to use first: refundable or nonrefundable?

Answer 16

nonrefundable

Question 17

medical expenses in excess of ___% of your AGI are included in your itemized deductions

Answer 17

10%

Question 18

what itemized deductions are subject to thresholds?

Answer 18

medical and miscellaneous

Question 19

what is meant by marginal tax bracket?

Answer 19

the percent that the next dollar of earnings will be taxed at

Question 20

what is the maximum a person under age 50 can contribute to a 401k and 403b in aggregate?

Answer 20

$18,000

Question 21

what is the maximum a person under age 50 can contribute to a 401k and 457 in aggregate?

Answer 21

they can contribute the maximum to each plan ($18k)

Question 22

how do you calculate the phaseout deduction to an IRA contribution when income is too high?

example: single filer earns $67,000 and contributes $5,500 to IRA and is an active particpant

Answer 22

excess over threshold / total threshold

$5,000 / $10,000 = 50%
50% x $5,500 = $2,750

Question 23

true or false?

you can use HSA funds to pay LTCI premiums

Answer 23

true

Question 24

true or false?

HSA funds can be used pay for COBRA coverage

Answer 24

true

Question 25

the child tax credit is reduced $___ for every $____ over threshold

Answer 25

50 ; 1,000

Question 26

can you use alimony to contribute to an IRA?

Answer 26

yes

Question 27

what are the 3 types of income?

Answer 27

active income
portfolio income
passive income