Individual: Gross Income

Question 1

What are the income limitations on Social Security?

Answer 1

Generally not taxable.
Base: 32,000 MFJ, 25,000 others; 0 if MFS & does not live apart.
Tier 1: Lesser of: 50% of SS benefits or 50% of excess of mAGI over base
Adjusted base (2): 44,000 MFJ, 34,000 for others; 0 MFS & does not live apart
Tier 2: Lesser of 85% of benefits or 85% of excess of magi over adjusted base

Question 2

Group term life insurance - What is required to be nondiscriminatory?

Answer 2

Not discriminatory if plan benefits 70% of all employees

Can exclude less than 3 years & part-time employees

Question 3

Is interest income from federal government taxable?

State and Local?

Answer 3

Federal: Yes

State/Local: No

Question 4

What is the treatment for State Tax Refund & Itemized Deduction? What is the Tax Benefit Rule?

Answer 4

Not taxable if not itemized.

If itemized, the excess of itemized over standard deduction is included in gross income

Question 5

Are S-corp paid premiums taxable?

Answer 5

Yes, if more than 2% owned in an S-corp

Question 6

Where are prizes & awards listed?

Answer 6

Other Income

Question 7

Do bonuses for service use basis or FMV?

Answer 7

FMV

Question 8

Are Non-Statutory Stock options included in income?

Answer 8

Yes, if traded on active market.

Shares purchased x (FMV - Price paid)

Question 9

Does Net self-employment income include federal income taxes?

Answer 9

No

Question 10

Is Home equity interest used for business deductible?

Answer 10

Yes, Fully Deductible for business expense - Schedule C

Question 11

What Is non-residential MACRS treatment?

Answer 11

Straight Line - 39 years

Question 12

Rental Property - what is the rental use test?

What is required to not include in income?

Answer 12

Use test: 14 days or 10% total rented days. Allocate utilities & maintenance
Not included when under 15 days

Question 13

Limitations on Flexible Spending Account carryover

Answer 13

$500 carryover or grace period to March 15

Question 14

Are contributions from an employer on behalf to unemployment insurance fund included in income?

Answer 14

No

Question 15

What are the MISC 2% Itemized deductions?

SUITTES

Answer 15

S – Safe Deposit Box
U – Union Dues
I – Investment (Custodial Fees)
T – Job Travel
T – Tax Preparation Fees
E – Job Education
S –Subscriptions to professional journals

Question 16

What are Deductions For AGI?

I Embraced Health Education Farm

Answer 16

"I”nterest on student loans ($2500)
“E”mployment tax (50% self employment tax, 100% medical premiums)
“M”oving expenses
“B”usiness expenses
“R”ent, royalty and flow-through entities
“A”limony
“C”ontributions to retirement
“E”arly withdrawal penalty
Jury”D”uty pay
“E”ducation ($4000)
“H”ealth savings account
“F”arm income

Question 17

What are the From AGI adjustments?

COMMITT

Answer 17

“C”haritable contributions
“O”ther miscellaneous
“M”iscellaneous expenses (2% AGI)
“M”edical expenses
“I”nterest
“T”axes
“T”heft or casualty

Question 18

What is included in gross income? What is the mnemonic?

Answer 18

Wishing I Didn’t Steal A Baby Cat.
I Previously Raised Kittens Until Someone Owned

W) Wages
I) Interest Income
D) Dividends
S) State and Local Refunds
A) Alimony received
B) Business income
C) Capital gains/losses

I) IRA income
P) Pension and annuity
R) Rental income/loss
K) K-1 income/loss
U) Unemployment compensation
S) Social Security benefits
O) Other income