Passed Individual taxes Flashcards
Individual Income Tax Rates
10% 15% 25% 28% 33% 35% 39.6%
Long-Term and Qualified Dividend Rates
0% rate for 10% - 15% income tax bracket
15% rate for 25% - 35% income tax bracket
20% rate for 39.6% bracket
Tax on 1250 un-recaptured gain
25%
Capital Gain on Collectibles
28%
Net Investment Tax
$200K single
$250 MFJ
$125 MFS
3.8% on passive income in excess of
Additional Medicare Tax
0.9% tax on wages or S.E. income in excess of $200K single
$250 MFJ
$125 MFS
2015 Standard Deductions
Single $6,300
MFS $6,300
HOH $9,250
MFJ $12,600
Dependent’s standard deduction
Greater of $1,050 or $350 plus earned income up to the ordinary standard deduction of $6,300
Aged or blind additional deduction
$1,250 each if MFJ / $1,550 each if single
Start of phase out for itemized deductions and exemptions
MFS $154,950 Single $258,250 HOH $284,050 MFJ $309,900 Phase it is lesser of 3% in excess of the threshold or 80% of itemized deductions.
Savings bond exclusion for higher education expenses
Modified adjusted gross income phaseout
All except MFJ: $77,200–$92,200
MFJ: $115,750–$145,750;
American Opportunity Credit
Deduction
100% of first $2,000 of education expenses
25% of expenses between $2,000 and $4,000 (maximum credit $2,500)
Lifetime Learning Credit
Credit Amount
AGI phase out
20% of first $10,000 of qualified education expenses. Not refundable.
Other status phase out $55,000-$65,000
MFJ phase out $110,000-$160,000
Student Loans
Maximum interest deduction–$2,500
Modified adjusted gross income phaseout range–Married, joint, $130,000–$160,000; all other filing status, $65,000–$80,000
Qualified Fringe Benefit Exclusion for Transportation
Commuter highway vehicle and transit pass–$130
Qualified parking–$250
Earned Income Credit
Passive income limit and earned income requirement
Passive income must be less than $3,350
Earned income must be more than a dollar
AMT tax rates
26% on AMTI of $185,400 / $92,700 if MFS
28% of AMTI over this amount
AMT Exemptions
Joint $83,400
MFS $41,700
Single $53,600
Estates and Trusts $23,800
AMT Exemption Phase Out
25% of amount AMTI exceeds:
$158,900 for married, joint and surviving spouses
$119,200 single (and head of household)
$79,450 married, filing separate
IRA maximum contribution
$5,500 or $6,500 if older than 50
IRA AGI deduction phaseout start for those covered by pension plan
Single $61,000-$71,000
MFJ and QW $98,000-$118,000
MFS $0-$10,000
IRA AGI deduction phaseout start where only spouse covered by plan starts at
$183,000 - $193,000
Roth IRA phaseout
$183,000 start (MFJ, qualifying widow); $116,000 all others except MFS
SIMPLE plan, maximum elective deferral and catch-up
(Sec. 408(k)(2)(C)–$12,500; age 50 catch-up–$2,500
3% dollar matching for employees
SEP Maximum Contribution
25%; maximum dollar amount $53,000
Deferral limit for 403(b) plan, state plan, 401(k)
$18,000 or $6,000 age 50 catch up for 401(k) and 403(b)
Compensation limit under section 401
$265,000
Key Employee Top Heavy Plan
$170,000
Highly Compensated Employee
$120,000
Eligible employee for simplified employee pensions
21 years old
Worked for you at least 3 of the past 5 years
$600
401(K) Loan
Up to the lesser of 50% of value or $50,000
Not a taxable event unless the rules are violated
You need to repay all of the money that you borrow
Pay yourself interest at the market rate for somebody with your credit.
Child Tax Credit
Credit per child
MAGI limit
$1,000 per child; phaseout MAGI $110,000 joint, $75,000 single, $55,000 MFS; refundable $3,000 Sec. 24(d)(1)(B)(i)
Age 16 or younger
Cafeteria Plan
Max $2,550
Unearned Income of a Minor Child
$1,050 ($10,500 parent election)
Foreign earned income exclusion
$100,800
Per Diem amount for Periodic Payments Received under Long-Term Qualified Care Insurance Contracts
$330 per day
Employee Health Insurance Expense of Small Employers (Sec. 45R(d)(3)(B))
Maximum average wage and number of employees
Maximum average wage of $25,800 to qualify for the credit.
Maximum of 10 employees.
50% credit
Home Office Safe Harbor
$5.00 per square foot; maximum 300 sq.ft. or $1,500
No tax on social security income if total income less than
$25K S, QB, HOH
$32K MFJ
85% inclusion social security income threshold
more than $34,000–S, HOH, QW
more than $44,000–married filing joint
OASDI Wage Base
$118,500
Social Security
Retirement Savings Test
$15,720 (under full retirement age); $41,880 (year of full retirement age)
Maximum annual HSA contributions deductible
$3,350 for individual; $6,650 for family coverage
Catch-up contributions for individuals 55 or older (but less than 65) is $1,000.
High deductible plan
Can’t be enrolled in Medicare
Can’t be claimed as a dependent
High Deductible Plan Qualifications
Single annual deductible of $1,300 or family annual deductible of $2,600
Deductibles, co-pays, and other amounts except premiums can’t exceed $6,450 self or $12,900 family
Adoption credit with special needs or other adoptions
$13,400 credit is maxed even if you don’t pay for the exp
Adoption phase out of MAGI
$201,010 to $241,010
Long Term Care (LTC) limitations on premiums
Deductions by age
40 or less $ 380
More than 40 but not more than 50 $710
More than 50 but not more than 60 $1,430
More than 60 but not more than 70 $3,800
More than 70 $4,750
Form 8938 thresholds
$50,000 end of year or $75,000 at any point
$100,000 end of year or $150,000 at any point if married
If tax home is outside the U.S., multiply the threshold by 4
presidentially declared disaster areas
Extension of time to file and pay
Does not apply to excise taxes, informational returns, or employment taxes
Casualty Loss
Subtract $100 for each occurrence and reduce by 10% of AGI
Maximize at $20K MFJ or $10K MFS
You must file a tax return if gross income exceeds … single, MFJ, MFS, HOH, QW
2014 figures exemption plus stand deduction MFS $3,950 (exemption only) Single $10,150 HOH $13,050 QW $16,350 MFJ $20,300 *Add $1,200 if older than 65
Dependents must file if …
Unearned income exceeds $1,000 or
Earned income exceeds $6,200
*Add $1,550 if older than 65 or blind
Special cases when taxpayers must file
AMT Form 5329 penalty Nanny Tax Social security and medicare tips Recapture first time homebuyer credit or other taxes HSA or MSA distributions S.E. earnings of $400 More than $108.28 of church wages that are except from FICA Advance premium tax credits
MFS can’t take these deductions
Student Loan Tuition and fees deduction Educational Credits Earned Income Credit Coordinate standard or itemized deductions
HOH Exception for months lived apart from spouse and misc exceptions
6 months apart from spouse
Or if you are married to a non-resident alien
Having a parent as a dependent will qualify a taxpayer for HOH
Employer is not required to file a schedule H if paid less than this amount. Nanny is still required to claim the wages.
$1,900
Do not count amounts paid to home workers under 18 and are students. (per 1040 instructions)
403(b) contribution limit
$20,500
401(k) catch up
Age 50, $5,500 extra
Statutory Employee
Types of jobs
Full-time life insurance
Agent or commission drivers
Traveling sales people
Homeworkers
Qualified Dividends, days rule
61 days during a 121 day period that began 60 days before ex date
Nontaxable Income
Child Support Life Insurance Gifts Hardest Hit Fund Emergency Homeowners' Loan Program Nontaxable Medicare waiver payments
Educator Expense
$250/person
Grades K-12
Worked at least 900 hours/year
Moving Expenses
But your new workplace must be at least 50 miles farther from your old home than your old home was from your old work- place. If you had no former workplace, your new workplace must be at least 50 miles from your old home.
39 Week test
Deduct health insurance for dependents up to __ years old.
27 years old
RMD age
70.5 years old
Retirement savings contributions credit (saver's credit) Age Status Credit Amount Phase Out
18 or older
Not a full time student and not a dependent
50% (Up to $36K AGI MFJ), 20% (Up to $39K MFJ), or 10% (Up to $60K MFJ) up to $2,000 per taxpayer
Single is half of MFJ AGI. HOH is half way between single and MFJ
Legally Blind
Vision in the better eye is less than 20/200
Or less than 20 degree vision
% for DPRG
9% of DPRG activities
You don’t have to file form 1116 if …
All foreign source income is from 1099-INT, 1099-DIV, or K-1
Foreign taxes aren’t more than $300 single or $600 MFJ
Dependent care expenses
Children under 13
Disabled spouse or other disabled person who could not care for themselves
Form 2210 safe harbor
100% or 110% if PY tax was more than $150K
90% of the current year of 66% for farmers
Excess parachute payment
Relates to change in control
20% excise tax paid by recipient
Company cant deduct payment as wages
Time too file innocent spouse
2 Years
Statute of limitations
3 years from the date the tax return was due or
2 years from the date that the tax was paid. Whichever is later.
Failure to file penalty
5% per month up to 25%
Minimum penalty equal to the lesser of $135 or 100% of tax owed if 60 days late
VITA
Volunteer Income Tax Assistance Help for those that... Make $53,000 or less Disabilities Elderly Limited English Speaking
TCE
Tax Counseling for the elderly
Special help for those older than 60
Frivolous Returns Penalty
$5,000 penalty
Form 4868 if you are out of the country
File your extension and pay by June 15
Form 4868 required payment
Pay 90% of your tax
Late payment penalty
0.5% per month up to 25%
Early Distribution
Before 59.5 years old
Form 5329 exceptions
- Due to total and permanent disability
- Distributions due to death
- Qualified retirement plan distributions up to the amount you paid for unreimbursed medical expenses during the year minus 10% (or 7.5% if you or your spouse were born before January 2, 1950) of your adjusted gross income (AGI) for the year.
- Distribution made under a qualified domestic order.
- Health insurance premiums
- Higher Education
- Up to $10,000 for first time homebuyer
- IRS levy
- Distributions to reservists on leave for at least 180 days
Vacation Rental
Greater of % of days or number of days
Considered using your dwelling as a personal residence if your use is greater than the greater of:
10% of rental days or
14 days
Special rule for renting less than *** days
If you rent a residence for less than 15 days, don’t report any rental income or expenses.
Gambling Income, line on 1040
Other income line 21
Gambling Losses
Schedule A - Other misc deductions not subject to the 2% thresholds
Only deduct losses up to gambling income.
Mortgage Debt Relief Act of 2007
Exclude cancellation of debt income for your personal residence.
2007 to 2014
Up to $2 mill of debt ($1 mill if MFS)
Exclude debt income if going through bankruptcy
Partially excludable if you are insolvent
Cancellation of farming debts
Cancellation of debt is not included in income if more than half of your income for the past 3 years was from farming.
Non-recourse cancellation of debt
Not taxable
Mortgage Deduction
$1,000,000 of primary mortgage
$100,000 of 2nd mortgage. Total of primary and secondary must be less than FMV of home.
Half if MFS
Combat Pay
Not Taxable
Excess contribution penalty
6% annually
6% excise tax on Roth
Reverse exchange parking period or like kind exchange must be completed by
Less than or equal to 180 days
Like kind exchange identifying period
45 Days from the date of sale to identify the new property in writing.
Elections for investment interest
Qualified dividends (but reduce amounts taxed at a lower rate) Capital Gains (Reduce amounts taxed at lower rates)
Donations to foreign organizations
Not deductible
1040NR deductions
State income taxes, charity, casualty loss, misc itemized deductions
Non-residents can’t claim
standard deduction
Credit for minimum tax. Your tax will be
The AMT tax even though it is less than the income tax
Exceptions to NOL 2 year carryback
3 years back for casualty/theft or declared disaster zone
5 years back for farming
5 years for qualified disaster loss
Time to amend and make NOL election
6 months
Innocent spouse relief - 3 types
- Innocent Spouse Relief - Relief from additional tax if income or deductions were misreported.
- Separation of Liability Relief - Separation of taxes due.
- Equitable Relief - When you don’t qualify for the above two reliefs.
* Must apply within two years after initial assessment was sent*
Separation of liability relief. Meet one of 3 criteria
- Divorced or separated
- Widowed
- Not a member of the same household for 12 months prior to the request for relief.
Common law
Dominant property system
Taxpayer and spouse are taxed separately
Community property
Taxpayer and Spouse contribute labor
Profits and income are joint
Shared ownership of assets and liabilities
Gift and estate exclusion
5.43 million
Life insurance and estates
Who owns the policy when the taxpayer died?
Policy left to spouse isn’t taxable when taxpayer dies
Gifts of life insurance policies within three years
Disallowed for federal and probably state purposes
Maximum Earned Income Credit
Children and Credit None $503 One $3,359 Two $5,548 Three or more $6,242
EIC AGI limits for single
Single: No children = $14,590
1 child = $38,511
2 children = $43,756
3 children = $46,997
EIC AGI limits for MFJ
No children = $20,020
1 child = $43,941
2 children = $49,186
3 children = $52,247
American Opportunity Phase Out
$80,000-$90,000 Single, OH, QW
$160,000-$180,000 MFJ
Deductible Rental Loss
$25,000 for MFJ
$12,500 MFS
Phased out at $150K ($75K MFS)
Limited to half when income is $100K ($50K MFS)
