Individual tax Flashcards
Cash Basis allowed for
Individuals owning business
Not for: Corp, partnership w/ c-corp partner, Inventory
Deductions to get to AGI
MSA/HSA cont Investment pen for early w/drawal SE med premiums 50% SE tax SEP, Keogh, Simple IRA cont Student Loan Int Tuition Alimony Pd atty fee in discrimination lawsuit ONLY Teacher exp moving exp
Section 179 exp
New & Used equip
500,000 max deduction on 2010,000 of assets
phased out $ for $ anything over the 2.01M
179 limited to NI
Installment sales
GP/ contract price
Contract price = Sales Price- Liab assumed by buyer
Home mortgage int
Reg Mortgage int deductible on loans up to $1M
Home Equity Loan Int ded up t $100k
Business losses - active/passive
Only offset active (W-2 = active)
Only offset passive (Ltd partnership inc = passive )
Int/Div income is not passive - investment inc
DEP conventions
MQ - mid qtr, 40% bought in last Qtr (Personal Prop)
MM- mid month ( Real Prop)
Leasehold Imp - S/L 15yrs
Business start up costs
deduct up to $5K
reduce $ for $ over $50K
remaining amortized
Medical Exp
Deductible once meet 10% floor
Accident/disability ins prems not deductible
Med exp paid on behalf of someone
Must be a citizen
if person family closer than cousin do not have to live with
most provide more than 50% support
Foreign taxes pd
Foreign income tax and prop tax deductible
personal prop tax are not deductible (car)
Investment Int
Deductible only to extent of Investment Inc
Gross Invest Inc- Investment exp in excess 2% AGI
= Net Investment Inc
mortgage pts
deductible if represents prepaid int
refinance pts amortized over life of loan
Charitable Cont
LTCG Prop - deduction for FMV up to 30% of AGI
STCG Prop- deduction for adj basis up to 50% AGI
Casualty Loss
Decrease in FMV of prop vs. Basis
Lower of FMV or Basis - Ins proceeds- $100-10% AGI = deduction
exps for repair not ded
Misc Sch A ded
Must exceed 2% of AGI Education if required to keep job Business travel exp 50% M&E Union Dues Tax prep fee legal fees to collect alimony appraisal fees to value casualty or charitable cont
Itemized deductions subject to reduction
Medical
Casualty
Gambling
Investment int exp
Qualifying Child
Must be US resident
Under 19 or 24 if student
Qualifying relative
Must be citizen of North America
Must be relative closer than cousin to not live with
otherwise must live with
provide more than 50%
cant earn more than 3,500 (SS doesn’t count)
Refundable tax credits
Earned Income Credit
Additional Child tax credits
Education credits
American Opportunity credit - Per student, not refundable
Lifetime learning - Per Taxpayer, not refundable
Dividend Income
Treated as Ordinary Income
Life insurance
Employer can pay premiums up to 50K without including in income
Premiums on coverage over 50K counts as income to taxpayer
scholarships
not taxable as long as no services rendered ( grad assistant) , money used for tuition and books
Tax free interest income
State and Muni bonds
US EE savings bonds
US treasuries - TAXABLE
US HH bonds - TAXABLE
Unemployment
Taxable as income
Workers compensation
NOT taxable
Alimony paid
deduction
Child support / Alimony received
taxable
adoptions
treated as personal exp - not deductible
IRA conts
Traditional = deductible
Roth IRA = non deductible
