Individual Tax Issues&Tax Credits Flashcards
2014 personal exemption amount
4,000
What factors are considered ‘one half support’ for head of household
rent; mortgage interest; taxes; insurance on the home; repairs; utilities; and food eaten in the home. The following costs may not be considered: clothing; education; medical treatment; vacations; life insurance; transportation; rental value of home owned by taxpayer; and the value of services provided by the taxpayer or a member of the taxpayer’s household.
net earnings from self employment calculation
Gross receipts - COGS - rent expense - liability insurance on business
how is home mortgage interest treated for AMT purposes?
It is treated as a deduction as long as the loan proceeds were used to acquire or make capital improvements to a principal residence
An employee who has social security tax withheld in an amount greater than the maximum for a particular year, may claim
An employee who has social security tax withheld in an amount greater than the maximum for a particular year, may claim the excess as a credit against income tax, if that excess resulted from correct withholding by two or more employers. An employee who had excess social security tax withheld from one employer should be reimbursed by the employer.
The alternative minimum tax (AMT) is computed as the
Excess of the tentative AMT over the regular tax.
The credit for prior year alternative minimum tax liability may be carried…
Forward indefinitely.
Income items subject to self employment tax
Income from:
- sole proprietorship
- income from partnership for GENERAL partners
- guaranteed payments for general&limited partners
Hope/American Opportunity Tax Credit for 2015
The credit is computed as 100% of the first $2,000 and 25% of the next $2,000 of qualified educational expenses, for a total of $2,500. This credit does not begin phasing out in 2015 for married filing joint returns until AGI reaches $160,000. The credit applies only to post-secondary expenses
In 2015, to qualify for the child care credit on a joint return, at least one spouse must
Be gainfully employed/looking for work or a student when related expenses are incurred
Child and dependent care credit
The credit percentage begins at 35% if AGI is less than $15,000, and is reduced by 1% for each $2,000 increment (or part) in AGI above $15,000. The minimum dependent care credit is 20%.
The maximum amount of expense eligible for the credit is $3,000 ($6,000 if more than one individual qualifies for care).
Child tax credit
$1,000 per dependent child under age 17.
Reduced for AGI 110K mfj or 75k single. Reduced by $50 for every $1000 over the threshold (always round up, any portion of the $1000 increment = a full increment)
Child and dependent care credit
Only applicable for children 13 and under.
$3,000 for 1 child, $6,000 for more than one.
Multiply either the 3,000 or 6,000 by correct percentage to get credit.
Percentage is 20-35%. 35% for AGI $15,000, reduced by 1% for each 2,000 over 15K. 43K+ AGI is 20%
American opportunity credit
must be in first 4 years of post secondary education.
qualifying expenses: tuition, fees, required materials
Credit per child is 100% of the first $2,000 and 25% of the next $2,000
Life time learning credit
Applies after the AOC expires (after the first 4 years of post secondary school) Expenses are limited to $10,000 per household. Credit is 20% of allowed expenses.
