Income for Individuals

Question 1

Nontaxable fringe benefits

Answer 1

• up to $270 per month for parking
• up to $50,000 group-term life insurance
• employer provided health insurance

Question 2

Taxable amounts of Social Security

Answer 2

Usually not taxable if low income from other sources. If higher, then usually 50%, at highest 85% is taxed.

To determine taxability:
Add all income sources (even tax-ex) + 1/2 SS and compare to $25,000 ($32,000 MFJ). If more than $25K but less than $34K, then only half is taxable. If more than 34K, then 85% taxable.

Question 3

10% tax on early retirement distributions

Answer 3

Usually apply to anyone before the age of 59.5

But there’s an exception if your 55 and quit/get fired/retire.

If you deposit the entire distribution into another qualified retirement account within 60 days, then you don’t have to pay penalty.

Question 4

Taxable amount of Annuity

Answer 4

$10K is tax-free, the rest of annual payment is included in AGI

Question 5

IRA distributions

Answer 5

Taxed at ordinary rates.

If you don’t take full amount of RMD then you get taxed 50% penalty on the insufficient distrib amount.

Start receiving RMD by 4/1 of the year following the year you turn 72.

Question 6

Reportability of non-cash gifts/services received for making deposits/opening bank accounts

Answer 6

• If deposit $5K or less, then anything w/ FMV over $10 must be reported as interest
• If deposit $5K or more, then anything w/ FMV over $20 must be reported as interest