ITX - 42 Flashcards
(42.1) Dependency exemptions: Social Security counts for the ___ test.
support
(42.1) Dependency exemptions: For a relative, such as a dependent parent or ADULT child, to qualify, they do not have to __ with the taxpayer.
live
(42.1) Dependency exemptions: Children of ANY age who are permanently and totally disabled qualify as a dependent if the parent provides ___.
at least half of the support
(42.1) Dependency exemptions: If the parent qualifies as a dependent for ___ purposes, a single child will be able to file as ___ (unless the dependency status is a result of a Multiple Support Agreement.
- exemption
- head of household
(42.2) Medical Expenses: If the child pays for __ for his or her parents, these premiums may be added to the medical expenses (applies to expenses greater than 10% of AGI).
Medigap or long-term care insurance premiums
(42.2) Medical Expenses: If the parent does not qualify as a dependent due to the income test, medical expenses paid by the child on their behalf may still be permitted as a deduction as long as more than ___% of the support of the parent is provided by the child.
50%
(42.2) Dependent care credit: Each taxpayer is allowed a credit of __% (higher if AGI is less than $___) of the amount of dependent care expenses paid to allow a taxpayer to be gainfully employed.
- 20%
- $43,000
(42.2) Dependent care credit: To qualify, the taxpayer must provide a home for more than half of the year for a dependent child under __ or an older ___ who is incapable of self-care.
- 13
- dependent/spouse
(42.2) Dependent care credit: The maximum amount of expenses used to calculate the credit is $___ for one dependent parent who is incapable of self-care and $___ for two.
- $3,000
- $6,000
(42.2) When siblings are sharing the cost of support for elderly parents, but none of them provides more than half of the support, a ___ may be used to allow tax benefits to be claimed, provided that each sibling contributes at least ___% of the cost of care and that, when combined, they provide at least ___% of the support for the parent.
- multiple support declaration
- 10%
- 50%
(42.2) Form ___, the “Multiple Support Declaration,” allows one sibling to claim the tax benefits by having the others waive their tax claims for that year.
Form 2120
(42.3) Alimony - Sec. 71: Alimony is deductible to __ in calculating AGI and are included in gross income of ___.
- the payer
- the receiver
(42.3) Alimony - Sec. 71: Requirements for alimony are:
- It must be paid in cash
- It must be paid under a divorce or separation agreement
- It must continue only until the death of the recipient spouse (or until the death of the payor, if earlier)
- The spouses cannot be members of the same household, and they may not file a joint return
(42.3) Alimony - Sec. 71: Cash payments to third parties are deductible alimony when the payment is to meet the ex-spouse’s obligation, such as for ___.
mortgage
real estate tax payments
(42.3) Child Support: Payments for child support are not deductible by the ___.
payer
(42.3) Child Support: If an amount in the divorce instrument is subject to change, based on the age or situation of a child, then the payments are considered ___ child support. The recipient of child support, does not include that amount in ___.
- nondeductible
- gross income
(42.4) Dependency exemption: If the decree or agreement was entered into after 2008, a noncustodial parent can claim the child only where the custodial parent signs a Form ___ to release their claim to the exemption, and the noncustodial parent must attach the form to his or her return.
Form 8332
(42.4) Dependency exemption: If the decree or agreement was entered into prior to ___, the noncustodial parent may be able to attach certain pages from the decree rather than Form 8332.
2009
(42.4) The parent with whom the child spent the most number of nights during the year.
custodial parent
(42.4) Property Settlements - Sec. 1041: Property transfers (settlements) that occur between spouses, incidental to a divorce and with __ year of the divorce, are ___ to the spouse who gives up the property and are not included in the income of the spouse who ___.
- one
- nondeductible
- receives it
(42.5) Excess Alimony Recapture - Sec. 71(f): Excess alimony payments are defined as the SUM of two amounts: 1) the amount by which the second-year payment exceeds the third-year payment, plus $___; and 2) the amount by which the first-year payment exceeds the average of the second-year and third-year payments, plus $___. The excess alimony is recaptured and included in income for the ___ year.
- $15,000
- $15,000
- third
(42.5) Excess Alimony Recapture - Sec. 71(f): Excess alimony payments are defined as the SUM of two amounts: 1) the amount by which the ___-year payment exceeds the third-year payment, plus $15,000; and 2) the amount by which the ___-year payment exceeds the average of the second-year and third-year payments, plus $15,000. The excess alimony is recaptured and included in income for the ___ year.
- second
- first
- third
(42.6) What does QDRO stand for?
Qualified Domestic Relations Order
(42.6) A ___ is an order from the court that tells the administrator or trustee of a qualified retirement plan how much to pay out to the nonowner-spouse pursuant to a divorce.
QDRO
(42.6) Life Insurance: If the husband is paying alimony to the wife, the husband could MAINTAIN ownership of an existing policy on his life, pay the premiums for that policy, and name his wife as irrevocable beneficiary. In this case, the premiums are ___. The wife receives the benefits ___.
not considered alimony
not deductible by the husband
income tax free
(42.6) Life Insurance: If the husband is paying alimony to the wife, the husband could TRANSFER ownership of an existing policy on his life, pay the premiums for that policy, and name his wife as irrevocable beneficiary. In this case, the premiums are ___. The wife receives the benefits ___.
treated as alimony
are tax deductible to the husband
income tax free
