ITX - 34 Flashcards
Joint status can be used by a widow or widower in the year of the spouse’s death and___years afterwards if the widow or widower continues to provide a household for a dependent child and remain unmarried.
Two
Married filing jointly requires clients to be legally married on___of their tax year.
The last day
To file as a single taxpayer, a client must be unmarried, divorced, or legally separated on___.
The last day of the tax year
To file as head of household, a client must be single or separated from a spouse for___and must pay half the cost of providing a household that is the principal place of abode for___.
The last six months of the tax year
A child or dependent for at least half of the year
Interest and dividend income are reported on?
Schedule B
Profit or loss from a business is reported on?
Schedule C
Capital gains and losses are reported on?
Schedule D
Income from rental real estate, partnerships, S corporations, estates and trusts are reported on?
Schedule E
Farm income or loss is reported on?
Schedule F
Adjustments for AGI: up to ____ interest on qualified education loans – this adjustment is reduced for taxpayers whose modified AGI is between___.
$2500
MFJ: $130,000-$160,000
Single: $65,000-$80,000
Adjustments for AGI: domestic production activities – the deduction is up to__% of qualified production activities income (deduction based on the taxpayer’s AGI and no more than___% of wages).
6%
50%
The Standard deduction for individuals who are claimed as dependents cannot exceed the greater of?
$1000 or $350 plus the individual’s earned income, up to the regular standard deduction for single taxpayers of $6200.
An additional amount of standard deduction is available for taxpayers and spouses who are?
Over 65 or blind
Additional amount of standard deduction for married filing jointly or married filing separately
$1200
Additional amount of standard deduction for single
$1550
Name the itemized deductions categories on schedule A
Medical and dental expenses Taxes you paid Interest you paid Gifts to charity Casualty and theft losses Job expenses and certain miscellaneous deductions
Any costs reimbursed by health plan are not deductible, and any portion deductible for AGI (___) is not deductible.
Self-employed health premiums
Taxpayers may only deduct medical costs to the extent that they exceed__AGI.
10%
2010 healthcare reform threshold for deducting medical expenses: if the tax payer or spouse reaches age 65 or older by the end of the year, they will be allowed to use the___threshold through 2016.
7.5%
Schedule A: taxes you paid include?
State and local income taxes
Real estate taxes on an unlimited number of properties
Personal property taxes
Mortgage interest on a principal and a second residence is deductible up to a maximum acquisition cost of ___, and interest on home equity loans is deductible up to___(Not to exceed___of the home, less the debt incurred to acquire the home).
$1 million
$100,000
The fair market value
Mortgage interest on refinance loans is also deductible on the loan balance that was outstanding at the time of the refinance, plus up to___for a home equity loan.
$100,000
Schedule A - Mortgage interest: Generally,___paid on the acquisition of a principal residence are deductible in the year paid, even if paid by the seller.
Points
Schedule A – Mortgage interest: points paid on refinancing a mortgage must be?
Amortized over the life of the loan
Schedule A - qualified charitable contributions: the overall limit of cash contributions is?
50% of AGI
Schedule A - qualified charitable contributions: contributions of appreciated capital gain property are deductible at their fair market value,___, depending on the type of entity receiving the contribution.
20 or 30%
Schedule A - casualty and theft losses___are deductible.
In excess of 10% of AGI, less $100 per loss
Casualty and theft losses: bases losses are not subject to?
$100 per loss reduction or the 10% floor
How to calculate the deduction for casualty losses
- determine the lesser of the fair market value or adjusted basis
- subtract any reimbursement from insurance
- subtract $100 per event
- Subtract 10% of the taxpayer’s AGI
Interest from loans attributable to property held for investment.
Investment interest
Investment interest costs are deductible to the extent of?
Net investment income
Investment expenses are deducted only to the extent that they exceed?
The 2% of AGI floor for miscellaneous deductions
Calculation for the taxpayer’s net investment income
Investment expenses minus 2% of AGI equals allowable offset
Investment income minus allowable offset equals net investment income
Schedule A: The remaining miscellaneous itemized deductions are only deductible to the extent that the aggregate of all the miscellaneous deductions exceed?
2% of AGI
Schedule A: miscellaneous itemized items include:
Tax return preparation fees Home office expenses Union dues Work clothes Investment expense Professional dues/subscriptions Unreimbursed employee expense Safe-deposit box fee Uniforms Hobby expense to the extent of hobby income
The tax law presumption is that an activity producing profit (net income) in___consecutive years is a business rather than a hobby. For horses, a profit in___years is sufficient.
Three out of five
Two out of seven
The phaseout for itemized deductions reduces itemized deductions by___of the amount by which AGI exceeds the threshold, with a maximum reduction of___of the otherwise allowable itemized deductions, excluding medical expenses, casualty losses, gambling losses, an investment interest.
3%
80%
Phaseout of itemized deductions begins at ___ for single, head of household, MFJ, and MFS.
The phaseout threshold begins at: $254,200 for single taxpayers $279,650 for head of household $305,050 for married filing jointly $152,525 for married filing separately
Personal exemption phaseout: The total amount of exemptions that may be claimed is reduced by ___%.
2%
All dependents must meet all of the following criteria:
1) be a citizen of the United States, Canada or Mexico
2) not file a joint return with another taxpayer, unless the return was filed in order to claim a refund
3) not claim another person as their own dependent
For children of the taxpayer or the taxpayer’s spouse, the child will qualify as a dependent if the child meets all of the following additional tests:
1) The child is under the age of 19, or under the age of 24 and a full-time student for at least five months during the year, or any age and permanently and totally disabled.
2) The child lives with the taxpayer for more than half the year.
3) The child does not provide more than half of his or her own support.
4) The child must be younger than the taxpayer unless the child is permanently and totally disabled
For other non-family members, the individual will qualify as a dependent if this individual meets the following three additional tests:
1) The individual lived with the taxpayer
2) The taxpayer or the taxpayer’s spouse provides more than half of the individual’s support
3) The individual’s income is less than the $3950 exemption amount
For children who fail to meet the above tests and for other family members, the relative will qualify as a dependent if this relative meets the following two additional tests:
1) The taxpayer or the taxpayer’s spouse provides more than half of the relative’s support.
2) The relative’s income is less than the $3950 exemption amount.
The___of a taxpayer cannot be claimed as a dependent, but a taxpayer can claim a personal exemption for a___.
Spouse, spouse
Subtracting___and___from AGI result in taxable income.
Itemized deductions
Personal exemptions
Kiddie Tax - children under 19 (24 if a student) to have unearned income up to___and to use their standard deduction to shelter it from tax. The next___income is taxed at the child’s tax rate (currently__). The rest of the income is taxed at the parents’ marginal tax rate.
$1000
$1000
10%
Income from___bonds is not taxable.
Municipal