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EA Course > Important > Flashcards

Important Flashcards

1
Q

HSA penalty on non-qualified distribution

A

20%

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2
Q

Which forms are used for reporting to IRS for employee health insurance

A
  1. Employer should provide 1095-C to employees and 1094-C to IRS that is summary of 1095-C
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3
Q

What is AGI limit for HSA

A

None

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4
Q

1095-A

A

Reconciliation or Premium Tax Credit

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5
Q

Does distribution from retirement plans included in NIIT

A

No

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6
Q

What types of income are included in calculation of NIIT Income

A

Investment
Rental & Royalties
Non-qualified annuities
Income from business involved in trading financial instruments and commodities
Income from passive activities

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7
Q

What is rate of NIIT

A

3.8%

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8
Q

NIIT threshold

A

250,000 MFJ
125,000 MFS
200,000 SINGLE AND ALL OTHER

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9
Q

What is threshold for Additional Medicare tax

A

250,000 MFJ
125,000 MFS
200,000 SINGLE
200,000 QSS

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10
Q

What income items are used to calculate additional Medicare rax

A

All wages
RRTA
Self employment income

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11
Q

Are employer required to withhold tax on NIIT and Additional Medicare Income

A

Yes but only Additional Medicare when income is more than 200,000. Not NIIT

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12
Q

Who are statuary employee? Can they deduct business expenses?

A

Independent contractor who are treated employee for tax purposes. Can deduct employment expenses.

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13
Q

Which form statuary employee use to report their income. Who are they?

A

They use Schedule C and claim business expenses. They include certain life insurance sales agents, certain drivers and travelling or city salesperson.

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14
Q

Does IRAs included in calculation of AGI for NIIT

A

Yes for AGI threshold but not for NIIT Income subject to tax.

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15
Q

What is threshold for paying employment taxes for in-home caregiver

A

2600

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16
Q

What items non-resident alien can deduct

A

Charitable contributions
State and local taxes
Casualty and theft in federally declared disaster
Misc deduction

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17
Q

What are Misc deductions on Scedule A

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

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18
Q

What is 1099-R

A

Distribution from IRA including rollovers

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19
Q

What is reported on 8938 but not FBAR

A

Partnership interest in foreign company

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20
Q

In which situation foster child does not count as child

A

QSS

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21
Q

Describe filing status when one spouse dies

A

First Year MFJ
Second Year QSS
Third Year QSS
Fourth Year HOH condition apply

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22
Q

Can you go from MFS to MFJ

A

Yes you can amend upto last 3 years of returns and change

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23
Q

Can you change from MFJ to MFS

A

Only if you like amended return before due date or executor change it after the death of spouse.

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24
Q

Tell me most important criteria for HOH

A

Relationship by blood, marriage or adoption.

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25
Q

Can you claim cousin who lives with you whole year for HOH

A

No. Because no blood relationship. Not close enough.

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26
Q

You live outside of USA with NRA, can you claim HOH

A

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

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27
Q

Tell me who can make a taxpayer HOH

A

Child, step child, foster child, siblings step siblings, nephew, nieces, grandchild and grandparents

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28
Q

What are two tests for residency

A

Green card test
Substantial presence test.

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29
Q

What is substantial presence test

A
  1. 31 days in current year
  2. 183 days in last three years including current year.
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30
Q

How you calculate 183 days

A
  1. Count days in current year in full
  2. 1/3 days of previous year
  3. 1/6 of days in second year before current year
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31
Q

Which visa are exempt

A

A visa
G visa
J-1 visa
F-1 foreign students
Canadian snowbirds who can qualify substantial presence test.

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32
Q

Do international students or J-1 visa holders pay FICA taxes

A

No

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33
Q

What are primary tests for dependants

A

Joint tax return test (dependant)
Dependant taxpayer test (taxpayer)
Citizenship or residency test (dependant)

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34
Q

Who is child

A

Under 19
Under 24 if student
Or any age and disabled

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35
Q

What is Tie breaker test

A

Parent
Higher AGI both not parents
Residency

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36
Q

Can foster parent be a qualifying person just as parent

A

No

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37
Q

Right of return

A

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.

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38
Q

1099-NEC

A

Issue 1099-NEC if paid 600 or more.

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39
Q

SE Taxes

A

Calculate on Scedule SE. If taxpayer has two businesses, can net income and possess. Spouse report their SE separately and cannot net it out.

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40
Q

What amount trigger 1099-INT

A

$10

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41
Q

At what amount taxpayer must report interest on schedule B

A

Exceeding 1,500

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42
Q

Which dividends are treated as interest

A

Dividends on deposits or shares of credit unions, domestic saving and loan associations and mutual saving banks

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43
Q

How do you treat gift on opening bank account

A

Interest

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44
Q

How do you treat bonus on opening bank account

A

Interest

45
Q

How do you treat bonus on opening bank account

A

Interest

46
Q

What is qualified dividend and long term capital gain for single taxpayer

A

44,625 0%
44,625 - 492,300 15%

47
Q

What is qualified dividend and long term capital gain for HOH taxpayer

A

59,750 0%
59,750-523,050 15%

48
Q

What is qualified dividend and long term capital gain for estate

A

3,000 0%
3,000-14,650 15%

49
Q

What is rate for gain on collectibles

A

28%

50
Q

What rate on 1250 uncaptured gain

A

25%

51
Q

Upto what amount qualified dividend and long-term capital gain is 15%

A

553,850

52
Q

What type of dividend you get from mutual fund

A

Generally ordinary dividends that are taxed at ordinary income

53
Q

What type of dividend you get from mutual fund

A

Generally ordinary dividends that are taxed at ordinary income

54
Q

Tell me about fees that add to the basis of an asset

A

Legal and accounting fees in transferring the asset
Legal fees in obtaining the title
Inspection fees for building
Brokers commission, settlement fees for stocks

55
Q

After how long transfer of property take place tax free in a divorce agreement

A

Generally 1 year

56
Q

What are personal assets

A

Movable assets used in business. E.g. furniture, auto, computer

57
Q

What are capital assets

A

Assets used for personal and investment purpose

58
Q

What are non-capital assets

A

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.

59
Q

What is wash sale period

A

61 days, when investment is purchased 30 days before or after the sale.

60
Q

Related party sale

A

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.

61
Q

Related party sale

A

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.

62
Q

For rental activities, how do you treat expenses you incur after buying but before putting into services (mortgage interest or repairs

A

Can’t deduct, add them to basis of property

63
Q

Can you claim loss if rental property is available for rent but not occupied

A

You cam claim the expenses but cannot incur loss

64
Q

Can you claim depreciation on idle property?

A

Yes and other expenses too.

65
Q

What is AGI limit for 25,000 loss deduction on rental lossess

A

100,000-150,000

66
Q

What is personal residence

A

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

67
Q

When must you issue 1099-MISC for royalties

A

$10

68
Q

If one spouse dies, how much time QSS to claim full 500,000 on sale on main home

A

2 years.

69
Q

What is period of years in which military personnel satisfy 2 year of use test

A

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.

70
Q

For sale of main home, do disabled person have special advantage

A

If a person becomes disabled during 5 years, they have live and use test of 1 year

71
Q

For 1031 properties, what are deadlines

A

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

72
Q

What type of properties qualify for 1031

A

Real properties for Business and Investment use, NOT personal properties

73
Q

Do section 1031 exchange allow between related parties

A

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

74
Q

What properties qualify for Involuntary exchange 1033

A

Business, investment, and personal use properties. Defer if invest in similar property

75
Q

Section 1033 exchange period for main home in federally declared disaster area

A

4-5 years depending on IRS guidance

76
Q

Section 1033 exchange period for real estate held for business or investment use

A

3 years

77
Q

Section 1033 exchange period for sale of livestock due to weather-related reasons

A

4 years

78
Q

Section 1033 exchange period for general properties including personal home

A

2 years

79
Q

Would a taxpayer have basis in restricted stock that was awarded on the condition he will stay with company for next 5 years

A

No

80
Q

If one spouse dies, how much time the surviving spouse has to qualify for 500,000 main home deduction

A

2 years from the date of death.

81
Q

When one spouse gets the house in divorce agreement, what are his/her basis

A

Basis does not change as they do in gift scenario.

82
Q

When one spouse gets the house in divorce agreement, what are basis

A

Basis does not change as they do in gift scenario.

83
Q

Which form you report Casualty and theft lossess

A

4684

84
Q

Is related party transaction allowed in 1031 properties?

A

Yes

85
Q

Is related party transaction allowed in 1033 properties?

A

No

86
Q

What is main difference between 1031 and 1033 properties?

A

1031 only real properties
1033 personal-use, business and investment properties. Related party allowed in 1031(2 years) but not 1033.

87
Q

For rental losses what is AGI limit for rental losses for MFJ, MFS and Single

A

MFJ 100,000
MFS 50,000
Single 100,000
Married Penalty

88
Q

In which cases you have marriage penalty?

A

Rental losses
NIIT
Additional Medicare Tax

89
Q

How many days rental income is not reportable?

A

15 days or less

90
Q

Is retroactive increase in wages taxable?

A

Yes

91
Q

What is the base amount for Social Security income tax for MFS

A

25,000 but only if lives apart entire year otherwise zero.

92
Q

What type of income is disability benefits received before retirement age

A

Earned income

93
Q

Could you deduct non-business bad debt?

A

Yes, as a short term capital loss and limited to 3,000 against earned income in current year.

94
Q

What would be sale price of home in a foreclosure, FMV or Amount of debt?

A

Amount of debt

95
Q

What would be non-deductible loss in a main home foreclosure?

A

Basis-FMV

96
Q

What would be non-deductible loss in a main home foreclosure?

A

Basis-FMV

97
Q

When can beneficiary start taking distribution from an educational saving account

A

Any time but timing affect taxable or non-taxable.

98
Q

Distribution from Cloverdale ESA are used in

A

Higher education expenses
Secondary education expenses
Elementary education expenses

99
Q

Is lottery pize included in gross income and taxable income.

A

Yes in both. So taxable income and gross income is same. Itemized deduction comes after these calculations

100
Q

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.

A

Not true

101
Q

What is age limit when unqualified distributions are taxable

A

65 and older

102
Q

Which form is used to calculate military personnel moving expenses

A

3903

103
Q

What determines the deduction of health insurance premium for a self employed taxpayer, gross income or net profit

A

Net profit after deduction of SE tax

104
Q

Form 1099-INT shows a penalty of $50. Where do you report it, 1040 or scrdule B?

A

1040

105
Q

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?

A

Alimony of 28,000 an adjustment to income.

106
Q

Where do you deduct legal fees paid in suit?

A

On Schedule A, if you include settlement amount in income.

107
Q

For QSS, how many months the child should live with the taxpayer.

A

Full year
Have provided over half the Cosy of keeping up the qualifying child’s home.

108
Q

Acronym for qualifying child

A

R Rats
Residency
Relationship
Age
Tiebreaker
Support

109
Q

Carryover period for Charitable Contributions

A

5 Years

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