Individual Tax Flashcards
What are the adjustments “for AGI”?
I-Interest on student loans
E-employment tax (50%, medical premiums-100%)
M-Moving expenses
B-Business expenses (Sch. C)
R-Rent/royalty & flow through entities
A-Alimony (CANNOT)
C-Contributions to retirement (KEOGH/IRA)
E-Early withdrawal penalty
D-Jury Duty pay
H-Healthy savings account
FARM income (schedule F)
What are itemized deductions?
C-Charitable contributions O-Other miscellaneous M-Miscellaneous expenses M-Medical expenses I-Interest T-Taxes paid T-Theft/casualty loss
When are injury awards taxable income?
Non physical awards, such as age/race discrimination, punitive damages and lost business profits.
When are injury awards not taxable income?
Bodily injury, pain & suffering, worker’s compensation or reimbursed medical expenses.
How are social security benefits taxed?
If earn < $25,000, social security is not taxable. If earn>$60,000, 85% of social security benefits are taxed.
How are qualified dividends taxed?
0%- if TP tax rate is in the 10% or 15% tax brackets
15%- if TP tax rate is in the 25%, 28%, 33% or 35% tax brackets
20%- if TP tax rate is in the 39.6% tax bracket.
What is the Schedule E form used for?
Supplementary income or loss. (RRF-COP) Rental income Royalties Copyrights Oil/gases Patents Flow through entities (sch, K-1) S corps, partnerships, estates & trusts
What is the NOL carryback and carryforward rule?
Carryback 2 years and carryforward 20 years
When calculating NOL, what deductions are not allowed?
Nonbusiness short term capital loss
Nonbusiness deductions (standard deduction)
Nonbusiness income
Personal exemption
What conditions must be met for alimony to be taxable income and a deductible expense?
C-cash or its equivalent (not property) A-Apart when payments are made (not living together) N-Not child support N-Not designated as property settlement O-Own returns for payer and payee T-Terminates on death of recipient
When are contributions to a traditional IRA not deductible?
When the individual is actively participating in another pension or profit-sharing plan AND
AGI on the tax return exceeds a threshold amount. (72K single and 119 MFJ 2017)
T/F: Contributions to a roth IRA are deductible.
False. This is because they are not taxable when withdrawn during retirement.
When does the 10% early withdrawal fee not apply for both IRAs? (Still included in gross income however)
Payment of medical expenses exceeding 10% AGI
Payment of qualified higher education costs
Death or disability of the participant
First time purchase of a home (up to 10k withdrawn)
What is included in Other miscellaneous expenses? (Itemized)
Gambling loss-to extent of winnings
Estate taxes on income in respect of a decedent.
What is included in Miscellaneous expenses?
Anything that exceeds 2% of AGI (BIT)
B-Business expenses of an employee
Business mileage, job travel, AICPA and union dues
Uniforms (if cannot wear outside of work)
Laptop
CPE/Job education
I-Investment expenses (safety deposit box)
Does not include fee for buy/sell (included in G/L)
Investment advisory fees
T-Tax preparation and attorney fees
Tax preparation and advice
Costs incurred to collect money owed by others
How does interest itemized deduction work?
No threshold.
Investment interest expense is deductible to extent of net investment income. Unused carried forward indef.
Mortgage loan interest- Acquisition up to 1,000,000
Home equity loans up to 100,000 (only up to 100% of
equity of home.)
IE, if take Home equity loan of 125%, the extra 25% is
a personal loan -> not dedutcible.
What is a qualifying relative?
C-Citizen or resident of US, Canada or Mexico
I-Income, limited to exemption amount, unless a
qualifying child, <19yrs old, fulltime (5 months)
student <24 yrs, any age if disabled.
R-Relationship, lineal descendant, basically everyone
besides a cousin. (if live with for full year)
S-Support over 50% of total annual support.
J- no Joint return with spouse.
