M1 Adjustments

Question 1

Adjustment are referred to as _____

Answer 1

“Above-the-line” - above the line deductions to arrive at AGI

Question 2

Educator Expenses. Eligible educators can deduct up to ___ of qualified expenses paid.

Answer 2

$250 (each for a total of $500 for couples filing jointly)

-Eligible educators include teachers Kindergarten - 12th grade (900 hours during a school year)

Question 3

What are the four types of retirement accounts?

Answer 3

1) Deductible IRA
2) Nondeductible IRA
3) ROTH IRA
4) Coverdell education savings account

Question 4

Deductible IRA. Two conditions when an IRA contribution is not deductible?

Answer 4

1) Excessive AGI “Rich”

2) Active participation in another qualified plan

Question 5

Deductible IRA. Husband and wife tested separately for two conditions UNLESS

Answer 5

“SUPER RICH” (in 2017, this amount was 186,000-196,000

Question 6

Deductible IRA. Contribution amount

Answer 6

up to $5,500 (each if filing joint)

Question 7

Deductible IRA. What is the catch-up contribution amount?

Answer 7

1,000 (2017) if 50 years of age or older

Question 8

Rollovers from Regular to ROTH IRAs are ___ in income but not ___

Answer 8

includable in income but there is NO penalty

Question 9

What is the maximum contribution amount for coverdell account?

Answer 9

2,000 annually per beneficiary (if 4 grandkids, 8,000 total)

Question 10

Which IRA option is NOT combined with other accounts?

Answer 10

Coverdell

Question 11

What is the student loan interest deduction amount for 2017?

Answer 11

limited to 2,500

Question 12

What is the tuition and fees deduction amount for 2017?

Answer 12

up to $4,000

Question 13

Moving Expenses. WORK-RELATED - what is the mileage distance requirement in order to use the moving expense adjustment?

Answer 13

New workplace is 50 MILES farther from old house than old workplace was

Question 14

Moving Expenses. Employee must work full-time in the new location for at least ___ weeks during the 12 month period immediately following the arrival.

Answer 14

39 weeks

Question 15

Moving Expenses. Four items NOT deductible that the CPA exam consistently tests on?

Answer 15

• Meals
• Pre-move house hunting
• Expense of breaking a lease
• Temporary living expenses
• Employer reimbursements are excludable from income to the extent the amounts qualify as deductions (so net the two)

Question 16

Which self-employment items are adjustments as opposed to being on the Sch C?

Answer 16

• Tax on Self-Employment (social security 50%)

- Self-employed health insurance (100% deductible) - family included

Question 17

Keogh (Profit-Sharing Plans) - self-employed retirement plans. What is the maximum annual deductible amount (2017)?

Answer 17

LESSER of 54,000 OR 25% net earnings

Question 18

Keogh Plans. Net earnings calculation.

Answer 18

Business income

Net business Income
<1/2 self employment tax>

Keogh net earnings

Question 19

Keogh Plans. SHORT-CUT

Answer 19

Gross self-employment income amounts * 20%

Question 20

Alimony cash or its equivalent (two examples of cash equivalent).

Answer 20

Credit card bills

College tuition bills

Question 21

Another adjustment includes attorney fees paid in what types of cases?

Answer 21

Discrimination