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Enrolled Agent: Individual Exam 2020 > Is it taxable or nontaxable? > Flashcards

Is it taxable or nontaxable? Flashcards

1
Q

Alimony and Separate Maintenance payments?

A

prior to 2019 - taxable

2019 and after - non-taxable

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2
Q

Aid to Families with dependent children (AFDC)

A

non-taxable

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3
Q

Damages wrongful incarceration

A

non-taxable

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4
Q

Unemployment compensation

A

taxable

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5
Q

Civil damages

A

non-taxable

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6
Q

Supplemental unemployment benefits

A

Taxable

Usually union unemployment benefits that supplement government unemployment

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7
Q

Severance pay

A

taxable

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8
Q

Rent

A

taxable

Rented for less than 15 days - non-taxable

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9
Q

Recovery of Prior year deduction

A

Taxable - Taxes were itemized in a prior year and tax liability was reduced.

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10
Q

Railroad Retirement Tier 1 benefits

A

A portion may be taxable (in place of Social Security for rail road employees)

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11
Q

Railroad Retirement Tier 2 benefits

A

taxable

Additional retirement benefits associated with length of service with railroad

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12
Q

Punitive or exemplary damages

A

Taxable - damages to teach a company a lesson for outrageous conduct

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13
Q

Prizes (like the lottery)

A

taxable

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14
Q

Employee awards and bonuses

A

taxable

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15
Q

Notary fees

A

taxable

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16
Q

Discounts

A

taxable

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17
Q

Breach of Contract Payment

A

Taxable

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18
Q

Back Pay

A

taxable

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19
Q

Disability

A

Taxable - employer funded

not taxable - government funded

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20
Q

Child Support

A

not taxable

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21
Q

Gifts

A

Non-taxable to a point

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22
Q

Interest on EE bond for education

A

non-taxable

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23
Q

Payments to a beneficiary of a deceased employee

A

non-taxable

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24
Q

Qualified Medical Waiver payment (payments made by the state for non-medical support)

A

non-taxable

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25
Q

Relocation payments

A

non-taxable

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26
Q

Rebates/Patronage dividends for a Co-op

A

non-taxable

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27
Q

Insurance proceeds

A

non-taxable

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28
Q

Rental Income

A

Less than 15 days - not taxable

otherwise - taxable

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29
Q

Rental allowance clergymen

A

non-taxable

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30
Q

Reverse mortgages

A

non-taxable

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31
Q

Sickness and Injury payments

A

non-taxable

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32
Q

Temporary Assistance For Needy Families (TANF)

A

non-taxable

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33
Q

Supplemental Social Security

A

Non-taxable: Benefits for the blind and disabled

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34
Q

Veteran’s Benefits

A

Non-taxable

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35
Q

Worker’s Compensation

A

non-taxable

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36
Q

Payments in lieu of workman’s compensation

A

non-taxable

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37
Q

Meals and lodging for convenience of employer

A

non-taxable

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38
Q

Distribution from an inherited IRA or Annuity

A

Taxable

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39
Q

Inherited IRA or Annuity

A

non-taxable

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40
Q

Interest on tax-free securities (muni bonds)

A

non-taxable

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41
Q

Inheritance

A

non-taxable

42
Q

Dividends on Life Insurance

A

non-taxable

43
Q

Damages for injury

A

non-taxable

44
Q

Cancelled Debt

A

In general: taxable

In relation to main home: my be non-taxable

45
Q

Estate and trust income

A

taxable

46
Q

Hobby Income

A

taxable

47
Q

Military pension

A

taxable

48
Q

Military Pay

A

A portion can be exempt from taxes. The rest would be taxes

49
Q

Partnership, Estates and S-Corp Income (K1)

A

taxable

50
Q

royalties

A

taxable

51
Q

Income earned by a decedent but not received before death

A

taxable

52
Q

Wages paid with virtual currency

A

taxable

53
Q

Bartered goods and services

A

taxable at FMV

54
Q

Prepaid income

A

taxable in year received

55
Q

What is the formula for Gross Income?

A

Gross Income
- Adjustments/Deductions (above the line) Section 62)
—————————————————————————-
Adjusted Gross Income (AGI)
- Greater of Standard or Itemized Deductions
- Qualified Business Income Deduction
——————————————————–
Taxable Income
* Tax Rate
———————————————————-
Gross Tax Liability
- Credits
————————————————————-
Net tax liability or Refund Receivable

56
Q

Compensation for services(fees, commissions, and fringe benefits)

A

taxable

57
Q

self employment income

A

taxable

58
Q

Gains from dealing in property

A

taxable

59
Q

Military pay

A

Generally, taxable

Active service in a combat zone - non taxable

60
Q

Business income

A

taxable

61
Q

clergy fees

A

taxable

62
Q

dividends

A

taxable

63
Q

embezzled funds

A

taxable

64
Q

farm income

A

taxable

65
Q

gains from illegal activity

A

taxable

66
Q

gambling winnings

A

taxable

67
Q

Group term life insurance premiums paid by employer for coverage >$50,000

A

taxable

68
Q

Interest

A

taxable

69
Q

Mileage allowance

A

taxable

70
Q

Military pay (unless combat)

A

taxable

71
Q

Partnership Income

A

taxable

72
Q

Pension

A

taxable

73
Q

Strike/Lockout benefits

A

taxable

74
Q

Treasure

A

taxable

75
Q

accident insurance proceeds

A

non-taxable

76
Q

Annuity (cost basis element)

A

non-taxable

77
Q

Damages personal physical injury/sickness

A

non-taxable

78
Q

Gifts received

A

non-taxable

79
Q

Group term life insurance premium paid by employer for coverage up to $50,000

A

non-taxable

80
Q

Interest from local, county, city, state bonds

A

non-taxable

81
Q

Life Insurance paid on death

A

non-taxable

82
Q

Military allowance

A

non-taxable

83
Q

Welfare payments

A

non-taxable

84
Q

Income from illegal activities

A

taxable

85
Q

Cancellation of Debt

A

taxable unless excluded

86
Q

Employer provided unemployment benefits

A

taxable

87
Q

Strike benefits from a union

A

taxable

88
Q

Section 111 exclusion - Recovery of Benefit

A

non-taxable. An amount recovered this year for a tax benefit taken in a prior year that had no impact on GI in the prior year

89
Q

Recovery of Tax Benefit

A

Taxable. Tax payer took a deduction in a prior year and then determined he is not longer entitled to the benefit.

In the current year, the TP will include in income the amount equal to the tax benefit.

90
Q

Reimbursement for moving expenses

A

Taxable.

Exception: qualified expenses for members of the military on active duty

91
Q

Treasure Trove

A

taxable: once it is undisputed AND in the the possession of the TP

92
Q

Disability payments as a result of a terrorist act against the United States

A

non-taxable

93
Q

Life insurance proceeds to a beneficiary due to death of the insured

A

non-taxable

94
Q

Employer paid death benefits paid to a beneficiary

A

taxable

95
Q

Life Insurance proceeds because the owner cancelled the policy

A 
Amount Received by owner
- premiums paid
-------------------------------------------
Gain/Loss
Gain: must be recognized - taxable
Loss: not recognized - not deductible
96
Q

What amount of Life Insurance Premiums paid by the employer should be included in GI and taxed?

A 
Total Life Insurance Premiums 
- amount paid by the employee
- $50,000 allowed exclusion
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Include in GI and tax
97
Q

Union Strike Benefits

A

taxable

98
Q

Disability payments from made from a pension

A

100% of payment is taxable until minimum retirement age is reached then follow typical pension/annuity rules

99
Q

Reimbursement of Employee expenses

A
  1. Reimbursement = expense: non-taxable
  2. Reimbursement > expense and difference is returned to employer: not taxable
  3. Reimbursement> expense and excess is not returned : taxable
  4. No proof of expenses: 100% taxable
100
Q

Insurance payments that reimburse expenses because TP has to live outside of their main home due to disaster/damage?

A

Excluded from GI

Enrolled Agent: Individual Exam 2020 (32 decks)

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