INDIVIDUAL - FORMS & TERMS Flashcards
Form 8867
Form 8867 is the Paid Preparer’s Due Diligence Checklist.
Required with returns claiming EITC, CTC, ACTC, ODC, AOTC, or HOH filing status.
EITC
Earned Income Tax Credit (or EIC)
A benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund.
CTC
Child Tax Credit
ACTC
Additional Child Tax Credit
ODC
Other Dependent Credit
TIN
Taxpayer Identification Number
ITIN
Individual Taxpayer Identification Number
AOTC
American Opportunity Tax Credit.
A credit for qualified education expenses paid for an eligible student for the first four years of higher education.
Maximum annual credit of $2,500 per eligible student
Partially Refundable:
You can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
Form 8863
Form 8863 is required for Education Credits (American Opportunity Tax Credit and Lifetime learning Credit)
HOH
Head Of Household filing Status
Child And Dependent Care Credit - Qualifying Individuals
- Your dependent qualifying child who was UNDER AGE 13 when the care was provided,
- Your SPOUSE who was physically or mentally incapable of self-care and lived with you for more than half of the year, or
- An individual who was physically or mentally incapable of self-care, LIVED WITH YOU for more than half of the year, and either: (a) was your dependent; or (b) could have been your dependent except that he or she received gross income of $4,200 or more, or filed a joint return, or you (or your spouse, if filing jointly) could have been claimed as a dependent on another taxpayer’s 2019 return.
HCTC
Health Coverage Tax Credit
A Federal tax credit administered by the IRS, has been extended for all coverage months beginning in 2020. This means eligible individuals can receive a tax credit to offset the cost of their monthly health insurance premiums for 2020 if they have qualified health coverage for the HCTC. A qualified health plan offered through a Health Insurance Marketplace is not qualified coverage for the HCTC.
EIC
Earned Income Credit
A benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund.
Form 8332
The Custodial Parent must file Form 8332 to allow the noncustodial parent to claim the child for the Child Tax Credit, Additional Child Tax Credit, and the credit for other dependents.
Form 4137
Form 4137 is used to figure the Social Security and Medicare tax owed on tips you did not report to your employer, including any allocated tips shown on your Form(s) W-2 that you must report as income.
However, Form 4137 should not be used to report tips received for work covered by the Railroad Retirement Tax Act. In order to get railroad retirement credit, the taxpayer must report these tips to his or her employer.
Form 8919
Use Form 8919 to report Uncollected Social Security and Medicare Tax on Wages reported on a 1099-MISC.
ATIP
Attributed Tip Income Program
Archer MSA
An Archer Medical Savings Account is a tax-exempt trust or custodial account set up with a financial institution such as a bank or an insurance company. Contributions you make to the account can be used to pay for health-care expenses not covered by your health insurance plan.
NOTE: The Archer MSA program expired on December 31, 2007
HSA
Health Savings Accounts
Employer contributions are not included in income.
Distributions not used for qualified medical expenses are included in income and may be subject to early withdrawal penalties.
Coverdell ESA
A Coverdell Education Savings Programs is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account
QTP
A Qualified Tuition Program, also referred to as a section 529 plan, is a program established and maintained by a state, or an agency or instrumentality of a state, that allows a contributor either to prepay a beneficiary’s qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses.
PTC
Premium Tax Credit
Credit for Federal Tax on Fuels
- A credit for certain nontaxable uses (or sales) of fuel during your income tax year.
- The alternative fuel credit.
- A credit for blending a diesel-water fuel emulsion.
Form 4136
Form 4136 - Used to claim credit for certain nontaxable uses of fuel during your income tax year.
Form 1040-SR
Is available as an optional alternative to using Form 1040 for taxpayers who are 65 or older.
Forms 1040A and 1040EZ
Are no longer used
Schedule A
Itemized Deductions
When itemized Deductions exceed the amount of the standard deduction, a taxpayer attaches Sch A to Form 1040 to claim the higher amount.
Schedule B
Interest and Ordinary Dividends
Used if:
- A taxpayer has over $1500 of taxable interest or ordinary dividens.
- Receipt of Interest from a seller-financed mortgage and the buyer used the property as a personal residence.
- Accrued interest from a bond.
- When reporting Original Issue Discount (OID) less than the amount shown on Form 1099-OID.
- Reduction of interest income on a bond by the amount of amortizable bond premium
- A claimed exclusion of interest from series EE or I US Savings bonds issues after 1989.
- The taxpayer receives interest or ordinary dividends as a nominee.
- The taxpayer has a certain interest in a financial account in a foreign country or foreign trust.
Schedule D
Capital gains and Losses
Used to report the sale or exchange of capital assets. Property for personal purposes, pleasure, or investment (Capital Assets).
Schedule J
Income Averaging for Farmers and Fisherman
Used to figure income tax by averaging, over the 3 previous years (base years), all or part of current year taxable income from farming or fishing.
Does not apply when figuring the AMT.
Schedule 8812
Additional Child Tax Credit
Used to figure the ACTC
EIC
Earned Income Credit
Used to give the IRS info about your qualifying child(ren).
Schedule 1
Additional Income and Adjustments To Income
Used to report additional income such as unemployment comp, prize or award money, gambling winnings, and to claim adjustments income such as student loan interest deduction, self-employment tax, and educator expenses.
Schedule C
Net Profit or Loss from Business (Under Schedule 1)
Used when operating a business as:
- Sole Proprietor or disregarded entity (single-member LLC treated as a sole proprietor)
- Qualified Joint Venture
- Statutory Employee
Schedule E
Supplemental Income and Loss (Under Schedule 1)
Used to report income or loss from rental real estate, royalties, partnerships, S Corps, Estates, Trusts, and Residual Interests in REMICs.
Schedule F
Profit or Loss from Farming (Under Schedule 1)
used to figure net profit or loss from regular farming. Includes farm products raised for sale or products bought for resale.
Schedule 2
Additional Taxes
Used to report amounts of other taxes such as Self-Employment Tax, Household Employment Tax, Additional Tax on IRAs or other qualified Retirement Plans and tax-favored account, ATM, or if needing to make an Excess Advance Premium Tax Credit Payment.
AMT
Alternative Minimum Tax
A tax that ensures that taxpayers pay at least the minimum. The AMT recalculates income tax after adding certain tax preference items back into adjusted gross income. AMT uses a separate set of rules to calculate taxable income after allowed deductions.
Schedule SE
Self-Employment Tax (Under Schedule 2)
Used to figure the tax due on net earnings from Self-Employment. This is essentially Social Security and Medicare for the self-employed.
For 2019 the first $132,900 of net earnings is subject to Social Security tax. All net earnings are subject to Medicare tax.
Schedule H
Household Employment Taxes (Under Schedule 2)
Used to report employment taxes withheld for household employees if the taxpayer paid cash wages of $2,100 or more in 2019 to any one household employee.
Schedule 3
Additional Credits and Payments
Used to claim any credit that wasn’t claimed on Form 1040, such as Foreign Tax Credit, Education Credits, General Business Credit, or for other payments such as an amount paid with a request for an extension to file or excess social security withheld.
Schedule R
Credit for the Elderly or Disabled (Under Schedule 3)
A US Citizen or Resident Alien with limited income who is age 65 or older at the end of the year can file this schedule to receive a credit.
How to order a paper return
Assemble any schedules and forms behind Form 1040 in order of the “Attachment Seq. Number” shown in the upper right corner of the schedule or form.
Form 8949
Form 8949 is used to list all Capital Gain and loss transactions. The subtotals from Form 8949 are carried to Sch D, where gain or loss is calculated in aggregate.
Reportable:
1. Sales, exchanges, or involuntary conversions of capital assets.
- Capital Gain distributions not reported directly on Form 1040.
- Nonbusiness Bad Debts
REMIC
Real Estate Mortgage Investment Conduit.
Reported on Sch E.
A complex pool of mortgage securities created to acquire investment income for its creators and investors
Q: Are these bad for the economy?
OID
Original Issue Discount
OID is the amount of discount or the difference between the original face value and the price paid for the bond. Or otherwise:
OID is defined as the difference between the stated redemption price at maturity and the issue price.
The discount is used by bond issuers to attract buyers to purchase bonds to raise funds for businesses.
Form 8853
The total contributions to an Archer MSA (appearing in Box 12 of Form W-2 with code R, must be reported on Form 8853, which should be filed with the tax return.
HRA
Health Reimbursement Arrangement.
provided by an employer and generally not included in income.
Health FSA
Health Flexible Spending Arrangement
Provided by an employer. The amount of salary reduction and reimbursements of medical care expenses for the employee and those of the employee’s spouse and dependents are not included in income.
De Minimis (minimal) Benefits
Employer provided services with costs so small that it’d be unreasonable to account for it. (ie. Coffee, donuts, etc)
EIC
Earned Income Credit
The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $55,952. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EIC may also give you a refund.
W-4
Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay.
Consider completing a new Form W-4 each year and when your personal or financial situation changes.
FICA
Federal Insurance Contributions Act
FICA tax is the money that is taken out of workers’ paychecks to pay older Americans their Social Security retirement and Medicare (Hospital Insurance) benefits. It is a mandatory payroll deduction.
SECA
Self Employed Contributions Act Tax
A levy from the U.S. government on those who work for themselves
It requires self-employed workers to contribute tax to pay both the employer and employee portions of FICA, which funds Social Security and Medicare.
Form 8849
Sales and other Dispositions of Capital Assets
Use Form 8949 to reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return. The subtotals from this form will then be carried over to Schedule D (Form 1040), where gain or loss will be calculated in aggregate.
Form 6251
The Form used to calculate Alternative Minimum Tax.
FIT
Federal Income Tax
Allocated Tips
Allocated tips are amounts your employer assigned to you in addition to the tips you reported.
They are required if:
1. You worked in a large food or beverage establishment (restaurant, cocktail lounge, or similar business)
- You received any tips directly from customers, and
- The amount of tips you reported to your employer was less than your share of 8% (or a lower rate approved by the IRS, if your employer requested it) of food and drink sales.
FEIE
Foreign Earned Income Exclusion
W-7
Use Form W-7 to apply for an IRS individual taxpayer identification number (ITIN). You can also use this form to renew an existing ITIN that is expiring or that has already expired.
ATIN
Adoption Taxpayer Identification Number
An ATIN is an Adoption Taxpayer Identification Number issued by the Internal Revenue Service as a temporary taxpayer identification number for the child in a domestic adoption where the adopting taxpayers do not have and/or are unable to obtain the child’s Social Security Number (SSN).
Recapture Tax
The recapture is a tax provision that allows the Internal Revenue Service (IRS) to collect taxes on any profitable sale of asset that the taxpayer had used to offset his or her taxable income.
Depreciation recapture is assessed when the sale price of an asset exceeds the tax basis or adjusted cost basis. The difference between these figures is thus “recaptured” by reporting it as income.
Passive Activity Loss Deductions for Rental Real Estate Activity
As a general rule, a taxpayer cannot offset passive losses against wage, interest, or dividend income. The rental of real estate is generally a passive activity. However, Congress has promulgated special tax laws for passive losses associated with real estate rental income. Federal tax law provides that up to $25,000 of losses associated with real estate rental activities can be netted against ordinary income.
List of Various Tax Credits (8):
- Health Insurance Premium Tax Credit
- Child and Dependent Care Credit
- Education Credits
- Adoption Credits
- Earned Income Credits
- Child Tax Credit and Credit for other Dependents
- Foreign tax Credit
- Saver’s Credit
Form 1095-A
Reports certain information about individuals who enroll in a qualified health plan through the Health Insurance Marketplace.
Indicates to Individuals their ability to:
- take the premium tax credit,
- reconcile the credit on their returns with advance payments of the premium tax credit (advance credit payments), and
- file an accurate tax return.
Which of the following taxpayers may be eligible for the premium tax credit?
A - Jason who is married but files separately from his spouse.
B - Lucas who is a dependent of another tax payer and earns less than 100% of the federal poverty level.
C - Tyra, who purchases health insurance on the exchange, with an income that is 200% of the federal poverty level.
D - Joe, who is covered by his employers health plan that provides minimum. value.
C - Tyra
FHE
Foreign Housing Exclusion
form 2555
Used to claim the foreign earned income exclusion, the foreign housing exclusion or the foreign housing deduction. Attach to Form 1040.
RRTA
Railroad Retirement Tax Act
If a taxpayer had excess Social Security tax withheld. They may be able to claim the excess as a credit against their income tax on their income tax return, if the taxpayer:
A. had more than one employer and too much social security tax withheld
B. had one employer that withheld too much social security tax
C. both A and B are correct
D. neither A and B are correct
A. had more than one employer and too much social security tax withheld
NOTES:
Most employers must withhold social security tax from your wages.
Employer’s error - If any one employer withheld too much social security tax, you can not claim the excess as a credit against your income tax. Your employer should adjust the excess for you. If the employer doesn’t adjust the overcollection, you can use Form 843, Claim for Refund and Request for Abatement, to claim a refund.
Two or more employers - If you had more than one employer during the taxable year and your total wages and compensation were over the wage base limit for the year, the total social security tax withheld may have exceeded the maximum amount due for the tax year. If you had more than one employer and too much social security tax withheld, you may be able to claim the excess as a credit against your income tax on your income tax return.
Michael, an active duty member of the US Army, incurs the following expenses when he moves duty stations from Texas to Georgia.
$158.40 in mileage (880 miles x 18 cents)
$75 tolls
$300 for lodging
$200 meals
If Michael is reimbursed for 100% of the above expenses, how much of the reimbursement can be excluded from gross income?
A. $733.40
B. $533.40
C. $233.40
D. $500
B. $533.40
NOTES:
Because Michael is an active member of the US Armed Forces, reimbursements for moving expenses when he changes duty stations are excluded from gross income, except for the cost of meals. No deduction or tax-free reimbursement is allowed for the cost of meals.
Jonah moves from Florida to Virginia at the request of his employer. Which of the following statements regarding moving expenses incurred by Jonah is correct?
A. Because Jonah is moving at least 50 miles from his current home, all qualified moving expenses are fully deductible
B. Jonah must work for his employer for at least 39 weeks within the first year of employment for his moving expenses to be deductible
C. If Jonah is an active member of the US military moving permanent duty stations, any qualified moving expenses for which Jonah is reimbursed may be excluded from income
D. Moving expenses are not deductible under any circumstances following the passage of the Tax Cuts and Jobs Act
C. If Jonah is an active member of the US military moving permanent duty stations, any qualified moving expenses for which Jonah is reimbursed may be excluded from income
NOTES:
For all taxpayers except active members of the US Armed Forces, the Tax Cuts and Jobs Act repealed the exclusion of qualified moving expense reimbursements from gross income and wages for taxable years beginning 1/1/18 and ending 12/31/25.
An individual taxpayer’s Total Tax includes:
- income tax
- alternative minimum tax
- non-refundable tax credits
- refundable tax credits
- other taxes
A. 1, 2, 3
B. 1, 2, 5
C. 1, 2, 3, 5
D. 1, 2, 3, 4, 5
C. 1, 2, 3, 5
NOTES:
Calculate income tax as a percentage of taxable income. After income tax and any alternative minimum tax, subtract any non-refundable tax credits and add any other taxes owed. Non-refundable credits only reduce tax; the taxpayer does not receive a refund of any excess. The result is the taxpayer’s total tax.
The IRS treats refundable credits the same as payments of tax.
Taxpayer ID Numbers (TIN)
5 versions
SSN ITIN ATIN EIN PTIN
Form 2210
Use Form 2210 to see if you owe a penalty for underpaying your estimated tax and, if you do, to figure the amount of the penalty.
You can also file Form 2210 to request a partial waiver with supporting documentation. For instance, a late payment due to a disability diagnosed.
An error doesn’t automatically meet the threshold of a bonified mistake. The taxpayer must have missed the error.
Form 8962
Form 8962 is used to figure the amount of your premium tax credit (PTC).
Reconcile it with any advance payments of the premium tax credit (APTC).
Form 2441
Form 2441 is used to take the credit for Child and Dependent Care Expenses.
GST
Generation-Skipping Transfer (GST) Tax
A TP must report on Form 709 the GST tax imposed on inter vivos direct skips.
Like the Gift Tax, each individual TP has a lifetime GST exemption to exclude a certain amount of assets from the tax. For 2019, the effective GST exemption is $11.4 million ($11.58 million in 2020) on lifetime transfers or distributions (direct or in trust) to a skip person.
IRD
Income in Respect of a Decedent (IRD)
This is all income the Decedent would have received had death not occurred that was NOT properly includible on the Final Return. This IS taxable to whomever receives it.
NOTE:
The character of the IRD is the same as it would be to the decedent if he were alive. If it would have been a capital gain to the decedent, it will be a capital gain to the taxpayer.
Form 706
United States Estate Tax Return.
The executor of a decedent’s estate uses Form 706 to figure the estate tax imposed by Chapter 11 of the IRS.
Form 706 is ALSO used to compute the generation skipping transfer (GST) tax imposed by Chapter 13 on direct skips.
NOL
Net Operating Loss (NOL)
Under the Tax Cuts and Jobs Act, the general 2-year net operating loss (NOL) carryback rule does not apply to NOLs arising in tax years ending after December 31, 2017. The taxpayer may carry the loss forward indefinitely. There is also a new provision that limits the NOL deduction to 80% of taxable income (determined without regard to the deduction) for losses arising in taxable years beginning after December 31, 2017.
NOLs arising in taxable years beginning before 2018 remain subject to prior law. Accordingly, such NOLs are not subject to the 80-percent limitation and remain subject to the prior-law 2-year carryback rules and the 20-year carryover limitation.
1099-INT
Interest that is earned should be reported to the taxpayer by the payer of the interest in either this form or the 1099-OID.
1099-OID
Interest that is earned should be reported to the taxpayer by the payer of the interest in either this form or the 1099-INT.
Form 8815
Use Form 8815 to figure the exclusion of Interest from Series I and EE bonds through the Education Savings Bond Program. Using this program, the Interest is Tax-Free when used to pay for qualified education expenses. The Form 8815 is attached to Form 1040.
Form 2439
Form 2439 is sent to shareholders reflecting their share of undistributed long-term capital gains. Each must treat their share of gain as a distribution, even if not actually received.
Report undistributed capital gains as long-term capital gains on Schedule D.
Form 4797
(Additional Income)
Form 4797 is used to report the sale or exchange of business property, certain involuntary conversions, the recapture of depreciation on certain business property that falls below 50% business use, and ordinary gains or loses of securities traders using the mark-to-market election.
Some of the gains on Form 4797 are reported on Schedule D as long-term capital gain, while other gains are ordinary and reported as “Other Gains or (Loss) on Schedule 1.
Form 8889
Used for HSAs (Health Savings Accounts) to report:
- HSA Contributions and Deduction
- HSA Distributions
HDHP atributes:
High Deductible Health Plan
- A higher annual deductible than typical health plans
- A max limit on the sum of the annual deductible and out-of-pocket medical expenses.
Self-only coverage:
Max Contrib: $3,500
Min Deduct.: $1,350
Max Out-of-Pocket: $6,750
Family Coverage:
Max Contrib: $7,000
Min Deduct.: $2,700
Max Out-of-Pocket: $13,500
TCJA
Tax Cuts And Jobs Act
SEP Plan
Simplified Employee Pension Plan
A SEP provides business owners with a simplified method to contribute to employees’ retirement. Contributions are made to an (Individual Retirement Account or Annuity) IRA set up for each plan participant (a SEP-IRA).
KEOGH PLANS
This is what retirement-plans for self-employed people were formerly called. It is simply a Qualified Plan for the SE.
But the law no longer distinguishes between corporate and other plan sponsors.
SEP and Simple options are more popular due to lower admin costs.
Descendants Defined in terms of an estate distribution by the State:
Children and Grandchildren
Ascendants Defined in terms of an estate distribution by the State:
parents and Grandparents
Collaterals Defined in terms of an estate distribution by the State:
Brothers and Sisters
What is the Applicable Credit amount for 2019?
$11,400,000
NOTE: The Applicable Credit is a lifetime tax credit that can be applied to offset both gift and estate taxes.
Up to Amounts: $11,400,000 exclusion and a $4,505,800 credit.
What is an Excess Business Loss?
An excess business loss is the amount by which the total deductions from taxpayer’s trades or businesses are more than total gross income or gains from taxpayer’s trades or businesses plus the threshold amount.
QBI
Qualified Business Income (also called Section 199A)
The net amount of qualified items of income gain, deduction and loss from any qualified trade or business, including from partnerships, S Corps, Sole Proprietorships, and certain trusts.
QBI Deduction
The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI), plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.
Note: Income earned through a C corporation or by providing services as an employee is not eligible for the deduction.
On which form is mortgage interest paid reported to a taxpayer by the mortgage holder?
Form 1098
What is a Devise?
A Devise is a gift of Real Property. It can be either a General Devise (non-specific land) or Specific Devise (a specific piece of property).
Form 709
Form 709 is used by a donor to file a gift.
Details: Transfers subject to the federal gift and certain generation-skipping transfer (GST) taxes. Allocation of the lifetime GST exemption to property transferred during the transferor’s lifetime.
What is Abatement?
If an estate is not large enough to pay its debts, they need to be paid proportionately. This is abatement.
What is Ademption?
When a specific bequest is impossible to fulfill, it is called ademption. In this case, the gift is neither given nor replaced.
Inter Vivos
A gift inter vivos, which means a gift between the living in Latin, is a legal term that refers to a transfer or gift made during the life of the grantor.
Inter vivos gifts, which includes property related to an estate, are not subject to probate taxes since they are not part of the donor’s estate at death.
FIFO
First In First Out:
If a person buys and sells securities at various times in varying quantities and cannot adequately identify the shares sold, the basis used is the basis of the securities acquired first. This is the first in, first out (FIFO) method
Form 8379
An injured spouse files Form 8379 with a jointly-filed tax return when the joint overpayment was—or is expected to be—applied to past-due obligation of the other spouse.
NIIT
Net Investment Income Tax
NIIT is imposed by Section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. Individuals, estates, and trusts will use Form 8960 to compute their Net Investment Income Tax.
A taxpayer with Net Investment Income will owe the NIIT if modified adjusted gross income exceeds one of the following thresholds:
MFJ: $250,000 MFS: $125,000 Single: $200,000 HOH: $200,000 QW: $250,000
Form 8960
Used to compute the Net Investment Income Tax (NIIT) for Individuals, Estates, and Trusts.
EXPLANATION
The Net Investment Income Tax applies to certain net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. Individuals, estates, and trusts will use Form 8960 to compute their Net Investment Income Tax.
Form 8814
Used to include a child’s investment income may be included on their parents’ return, rather filing a separate return for the child.
EXPLANATION
To qualify for inclusion on the tax return of the parents all of the child’s income must be unearned. The child cannot have earned income. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust.
Form 8814 is called the:
Parents’ Election To Report Child’s Interest and Dividends
Form 9465, or 9465-FS
Forms used to file a request for an Installment Plan to pay off tax liability.
A taxpayer with outstanding tax liability (including penalties and interest) of $50,000 or less may file Form 9465, or 9465-FS. This is known as a streamlined installment agreement because the IRS does not require a financial statement (Form 433-A, Form 433-B, Form 433-D, or Form 433-F) or substantial disclosure of financial information. A liability greater than $50,000 can be considered if the taxpayer pays down the liability to $50,000 or less prior to the agreement being granted. Generally, a taxpayer must pay off the balance due on a streamlined IA within a 72-month period.
If the total amount the taxpayer owes is greater than $25,000 but not more than $50,000, the taxpayer may use a slightly expanded Form 9465-FS Installment Agreement Request. This form has an extra page (Part II) with additional information to complete. A taxpayer using Form 9465-FS must agree to a Direct Debit Installment Agreement (DDIA) to qualify for an IA without completing a financial statement (Form 433-F, Collection Information Statement).
Form 9465, or 9465-FS
Forms used to file a request for an Installment Plan to pay off tax liability.
A taxpayer with outstanding tax liability (including penalties and interest) of $50,000 or less may file Form 9465, or 9465-FS. This is known as a streamlined installment agreement because the IRS does not require a financial statement (Form 433-A, Form 433-B, Form 433-D, or Form 433-F) or substantial disclosure of financial information. A liability greater than $50,000 can be considered if the taxpayer pays down the liability to $50,000 or less prior to the agreement being granted. Generally, a taxpayer must pay off the balance due on a streamlined IA within a 72-month period.
If the total amount the taxpayer owes is greater than $25,000 but not more than $50,000, the taxpayer may use a slightly expanded Form 9465-FS Installment Agreement Request. This form has an extra page (Part II) with additional information to complete. A taxpayer using Form 9465-FS must agree to a Direct Debit Installment Agreement (DDIA) to qualify for an IA without completing a financial statement (Form 433-F, Collection Information Statement).
Form 114
Form 114 is used to report certain foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, to the Treasury Department and keep certain records of those accounts.
This is required under the Bank Secrecy Act.
FinCEN
Financial Crimes Enforcement Network
There is no limitation in connection to the amount that can be deducted as a charitable bequest.
True or False?
True.
EXPLANATION
In determining the amount of a taxable estate, certain deductions are allowed for costs such as funeral expenses, debts, administrative expenses, bequests to a spouse, and charitable bequests. There is no limitation to the amount that can be deducted as a charitable bequest.
There is no limitation in connection with charitable bequests.
True or False?
True.
EXPLANATION
In determining the amount of a taxable estate, certain deductions are allowed for costs such as funeral expenses, debts, administrative expenses, bequests to a spouse, and charitable bequests. There is no limitation to the amount that can be deducted as a charitable bequest.
Form 8606
Filed to report nondeductible contributions to a Traditional IRA.
NUA
Net Unrealized Appreciation
NUA is the net increase in a securities’ value (the amount in excess of basis) while inside the retirement plan.
To receive this benefit, the taxpayer distributes the ENTIRE account in a lump-sum distribution and pays ordinary Income Tax on the Basis of the securities, which include both the participant and employer contributions used to purchase the securities.
The taxpayer will generally defer paying tax on the NUA until the securities are sold. At that time any gain due to NUA is a Long-Term Capital Gain, Regardless of the actual holding period of the securities.
This applies to distributions of the employer corporation’s stocks, bonds, registered debentures, and debentures with interest coupons attached.
This tax benefit has the potential of being substantial, BUT, use caution when advising a client to rollover as the tax benefits are lost if the securities are rolled into an IRA or another qualified plan!
Excess Business Loss
An Excess business loss is the amount by which the total deductions from TPs trades or businesses are more than total gross income or gains from TP’s trades or businesses, plus the threshold amount.
Threshold Amount`
For 2019, the threshold amount is $255,000 ($510,000 for joint returns). These amounts are indexed for inflation.
Can you carry forward excess business loss in subsequent years?
Yes.
A TP treats any excess business loss as part of the TP’s Net Operating Loss (NOL) Carryforward in subsequent years.
The IRS now limits the amount of NOL a TP may claim the following year to 80% of taxable income determined without regard to the NOL deductions.
Prior to this new law, a TP could reduce taxable income to zero in subsequent years.
Can you carry forward excess business loss in subsequent years?
Yes.
A TP treats any excess business loss as part of the TP’s Net Operating Loss (NOL) Carryforward in subsequent years.
The IRS now limits the amount of NOL a TP may claim the following year to 80% of taxable income determined without regard to the NOL deductions.
