Important Flashcards
HSA penalty on non-qualified distribution
20%
Which forms are used for reporting to IRS for employee health insurance
- Employer should provide 1095-C to employees and 1094-C to IRS that is summary of 1095-C
What is AGI limit for HSA
None
1095-A
Reconciliation or Premium Tax Credit
Does distribution from retirement plans included in NIIT
No
What types of income are included in calculation of NIIT Income
Investment
Rental & Royalties
Non-qualified annuities
Income from business involved in trading financial instruments and commodities
Income from passive activities
What is rate of NIIT
3.8%
NIIT threshold
250,000 MFJ
125,000 MFS
200,000 SINGLE AND ALL OTHER
What is threshold for Additional Medicare tax
250,000 MFJ
125,000 MFS
200,000 SINGLE
200,000 QSS
What income items are used to calculate additional Medicare rax
All wages
RRTA
Self employment income
Are employer required to withhold tax on NIIT and Additional Medicare Income
Yes but only Additional Medicare when income is more than 200,000. Not NIIT
Who are statuary employee? Can they deduct business expenses?
Independent contractor who are treated employee for tax purposes. Can deduct employment expenses.
Which form statuary employee use to report their income. Who are they?
They use Schedule C and claim business expenses. They include certain life insurance sales agents, certain drivers and travelling or city salesperson.
Does IRAs included in calculation of AGI for NIIT
Yes for AGI threshold but not for NIIT Income subject to tax.
What is threshold for paying employment taxes for in-home caregiver
2600
What items non-resident alien can deduct
Charitable contributions
State and local taxes
Casualty and theft in federally declared disaster
Misc deduction
What are Misc deductions on Scedule A
Gambling losses
Impairment-related work expenses
Amortizable premium on taxable bonds
Casualty and theft losses from income producing property
Federal estate tax in respect to dependents
Repayment of income under claim of right
What is 1099-R
Distribution from IRA including rollovers
What is reported on 8938 but not FBAR
Partnership interest in foreign company
In which situation foster child does not count as child
QSS
Describe filing status when one spouse dies
First Year MFJ
Second Year QSS
Third Year QSS
Fourth Year HOH condition apply
Can you go from MFS to MFJ
Yes you can amend upto last 3 years of returns and change
Can you change from MFJ to MFS
Only if you like amended return before due date or executor change it after the death of spouse.
Tell me most important criteria for HOH
Relationship by blood, marriage or adoption.
Can you claim cousin who lives with you whole year for HOH
No. Because no blood relationship. Not close enough.
You live outside of USA with NRA, can you claim HOH
Yes, you can disregard marital status, then if you have child or parent or qualifying person (all siblings or their kids) you can claim it
Tell me who can make a taxpayer HOH
Child, step child, foster child, siblings step siblings, nephew, nieces, grandchild and grandparents
What are two tests for residency
Green card test
Substantial presence test.
What is substantial presence test
- 31 days in current year
- 183 days in last three years including current year.
How you calculate 183 days
- Count days in current year in full
- 1/3 days of previous year
- 1/6 of days in second year before current year
Which visa are exempt
A visa
G visa
J-1 visa
F-1 foreign students
Canadian snowbirds who can qualify substantial presence test.
Do international students or J-1 visa holders pay FICA taxes
No
What are primary tests for dependants
Joint tax return test (dependant)
Dependant taxpayer test (taxpayer)
Citizenship or residency test (dependant)
Who is child
Under 19
Under 24 if student
Or any age and disabled
What is Tie breaker test
Parent
Higher AGI both not parents
Residency
Can foster parent be a qualifying person just as parent
No
Right of return
You payback what you included in gross income last year and amount is more than 3,000. You can claim this year. Do not amend the return. 3,000 or less can’t be claimed.
1099-NEC
Issue 1099-NEC if paid 600 or more.
SE Taxes
Calculate on Scedule SE. If taxpayer has two businesses, can net income and possess. Spouse report their SE separately and cannot net it out.
What amount trigger 1099-INT
$10
At what amount taxpayer must report interest on schedule B
Exceeding 1,500
Which dividends are treated as interest
Dividends on deposits or shares of credit unions, domestic saving and loan associations and mutual saving banks
How do you treat gift on opening bank account
Interest
How do you treat bonus on opening bank account
Interest
How do you treat bonus on opening bank account
Interest
What is qualified dividend and long term capital gain for single taxpayer
44,625 0%
44,625 - 492,300 15%
What is qualified dividend and long term capital gain for HOH taxpayer
59,750 0%
59,750-523,050 15%
What is qualified dividend and long term capital gain for estate
3,000 0%
3,000-14,650 15%
What is rate for gain on collectibles
28%
What rate on 1250 uncaptured gain
25%
Upto what amount qualified dividend and long-term capital gain is 15%
553,850
What type of dividend you get from mutual fund
Generally ordinary dividends that are taxed at ordinary income
What type of dividend you get from mutual fund
Generally ordinary dividends that are taxed at ordinary income
Tell me about fees that add to the basis of an asset
Legal and accounting fees in transferring the asset
Legal fees in obtaining the title
Inspection fees for building
Brokers commission, settlement fees for stocks
After how long transfer of property take place tax free in a divorce agreement
Generally 1 year
What are personal assets
Movable assets used in business. E.g. furniture, auto, computer
What are capital assets
Assets used for personal and investment purpose
What are non-capital assets
Assets held for business-use or created for the purpose of earning revenue (inventory, copy rights, depreciable property even if fully depreciated, real property used in business, A/R, securities, business supplies, commodities, self produced assets.
What is wash sale period
61 days, when investment is purchased 30 days before or after the sale.
Related party sale
Spouse, sibling, half-sibling, parents and grandparents, children and grand children. Partnership or corporation with 51% control. Tax-exmpt organization and estate and trusts controlled by taxpayer. Step relative not included.
Related party sale
Spouse, sibling, half-sibling, parents and grandparents, children and grand children. Partnership or corporation with 51% control. Tax-exmpt organization and estate and trusts controlled by taxpayer. Step relative not included.
For rental activities, how do you treat expenses you incur after buying but before putting into services (mortgage interest or repairs
Can’t deduct, add them to basis of property
Can you claim loss if rental property is available for rent but not occupied
You cam claim the expenses but cannot incur loss
Can you claim depreciation on idle property?
Yes and other expenses too.
What is AGI limit for 25,000 loss deduction on rental lossess
100,000-150,000
What is personal residence
If property is used for personal use for greater of:
14 days
10% of total days it was rented
You can’t use excessive expenses to offset the income from other sources. Carryover
When must you issue 1099-MISC for royalties
$10
If one spouse dies, how much time QSS to claim full 500,000 on sale on main home
2 years.
What is period of years in which military personnel satisfy 2 year of use test
They can suspend the time living abroad upto 10 years. Those years won’t count. For example if they met own and use test before this 10 year. They can sell now and claim exemption.
For sale of main home, do disabled person have special advantage
If a person becomes disabled during 5 years, they have live and use test of 1 year
For 1031 properties, what are deadlines
You have to identify within 45 days after transfer.
Acquire before ERLIER of the 180th day or tax return due date, including extension
FORM 8824
Escrow Account, don’t receive money
What type of properties qualify for 1031
Real properties for Business and Investment use, NOT personal properties
Do section 1031 exchange allow between related parties
Yes, but don’t sell within 2 years after purchase
But exceptions in case of death, involuntary exchange, or satisfying IRS that it was not for tax avoidance
What properties qualify for Involuntary exchange 1033
Business, investment, and personal use properties. Defer if invest in similar property
Section 1033 exchange period for main home in federally declared disaster area
4-5 years depending on IRS guidance
Section 1033 exchange period for real estate held for business or investment use
3 years
Section 1033 exchange period for sale of livestock due to weather-related reasons
4 years
Section 1033 exchange period for general properties including personal home
2 years
Would a taxpayer have basis in restricted stock that was awarded on the condition he will stay with company for next 5 years
No
If one spouse dies, how much time the surviving spouse has to qualify for 500,000 main home deduction
2 years from the date of death.
When one spouse gets the house in divorce agreement, what are his/her basis
Basis does not change as they do in gift scenario.
When one spouse gets the house in divorce agreement, what are basis
Basis does not change as they do in gift scenario.
Which form you report Casualty and theft lossess
4684
Is related party transaction allowed in 1031 properties?
Yes
Is related party transaction allowed in 1033 properties?
No
What is main difference between 1031 and 1033 properties?
1031 only real properties
1033 personal-use, business and investment properties. Related party allowed in 1031(2 years) but not 1033.
For rental losses what is AGI limit for rental losses for MFJ, MFS and Single
MFJ 100,000
MFS 50,000
Single 100,000
Married Penalty
In which cases you have marriage penalty?
Rental losses
NIIT
Additional Medicare Tax
How many days rental income is not reportable?
15 days or less
Is retroactive increase in wages taxable?
Yes
What is the base amount for Social Security income tax for MFS
25,000 but only if lives apart entire year otherwise zero.
What type of income is disability benefits received before retirement age
Earned income
Could you deduct non-business bad debt?
Yes, as a short term capital loss and limited to 3,000 against earned income in current year.
What would be sale price of home in a foreclosure, FMV or Amount of debt?
Amount of debt
What would be non-deductible loss in a main home foreclosure?
Basis-FMV
What would be non-deductible loss in a main home foreclosure?
Basis-FMV
When can beneficiary start taking distribution from an educational saving account
Any time but timing affect taxable or non-taxable.
Distribution from Cloverdale ESA are used in
Higher education expenses
Secondary education expenses
Elementary education expenses
Is lottery pize included in gross income and taxable income.
Yes in both. So taxable income and gross income is same. Itemized deduction comes after these calculations
If a taxpayer is covered by a high deductible plan, but also has a supplemental insurance policy for a specific disease, then he is not eligible to contribute to an HSA.
Not true
What is age limit when unqualified distributions are taxable
65 and older
Which form is used to calculate military personnel moving expenses
3903
What determines the deduction of health insurance premium for a self employed taxpayer, gross income or net profit
Net profit after deduction of SE tax
Form 1099-INT shows a penalty of $50. Where do you report it, 1040 or scrdule B?
1040
John was required to pay alimony 20,000 medical expenses of 10,000 according to the divorce agreement in 2017. This year, he paid 20,000 alimony and 8,000 medical expenses. 4,000 to hospital and 4,000 in cash to ex-spouse. How do you treat it?
Alimony of 28,000 an adjustment to income.
Where do you deduct legal fees paid in suit?
On Schedule A, if you include settlement amount in income.
For QSS, how many months the child should live with the taxpayer.
Full year
Have provided over half the Cosy of keeping up the qualifying child’s home.
Acronym for qualifying child
R Rats
Residency
Relationship
Age
Tiebreaker
Support
Carryover period for Charitable Contributions
5 Years
