Notes Flashcards
Non-resident aliens – don’t qualify for…
No standard deduction
Can only take some itemized deductions
No education credits – even if US citizen is married to a non-resident alien filing jointly
No premium tax credit and no investment income tax
No EITC
No CTC or ACTC
No Foreign earned income exclusion
No foreign tax credit
Divorced parents - only custodial parent can claim
HOH – only custodial parent can claim
CDCTC – only custodial parent
EITC – only custodial parent
When claimed as a dependent – not eligible for
HSA deduction
EITC
Savers credit
Premium tax credit
If eligible to be claimed as a dependent – not qualified for
No education credits
EITC childless
Social Security number required for the following credits
Earned income tax credit
Child tax credit
Additional child tax credit
MFS does not qualify for
Premium tax credit
Education credits
Adoption credit
Education savings program – bond
Student loan interest deduction
Social Security benefits are taxed – if living with spouse
Don’t qualify for special $25,000 loss allowance – if living with spouse
CDCTC – must meet certain rules
If spouse itemizes – you have to or take a zero dollar standard deduction
Capital loss reduced to $1500 of $3000
Is the tax home based on the workers mailing address or place of work
A taxpayers tax home is usually determined by the location of the principal place of work, regardless of mailing address or where they actually live
$25,000 loss allowance
Max AGI of $100,000
Reduces the allowance one dollar for every two dollars over the limit
Recourse when 60 day rollover window is missed for a traditional IRA
Maybe be eligible for an automatic waiver of the 60 day IRA rollover rule
Or request a private letter ruling from the IRS
Schedule see deduction for meals and entertainment
Some business meals and entertainment expenses are 100% deductible if the expense is primarily for the benefit of employees who are not highly compensated or key employees
Meals are deducted at 50%
Business related entertainment expenses have been eliminated and are not deductible
Optional method of calculating the home office deduction
Taxpayer can deduct five dollars per square foot for the space in the home that is used for business
With a maximum allowable square footage of 300 ft.²
Equals a maximum deduction of $1500
There is no depreciation expense and no recapture of depreciation upon the sale of the home
How are losses on a second or vacation home deductible?
They are not deductible
Section 121 exclusion applies to primary residence
Loss on a vacation home or secondary home does not qualify and losses are not deductible
What fees cannot be included in the basis of a property when it is purchased
Casualty insurance premiums
Rent for occupancy of the property before closing
Charges for utilities or other services related to occupancy of the property before closing
Charges connected with getting alone – points,
mortgage, insurance, premiums,
loan assumption, fees
Cost of a credit report
Fees for an appraisal that are required by a lender
Fees for refinancing a mortgage
Or amount placed in escrow for the future payments of taxes or insurance
Wash sales – married filing separately
If spouses are married filing separately, wash sales still apply
Gross estate versus taxable estate
The value of the gross estate is figured without regard to liabilities. It is only the assets.
Taxable estate takes into consideration, several deductions to determine the amount of the taxable estate
