Personal Tax Flashcards
How can you pay IRS online
- Pay online using Direct Pay by going to https://www.irs.gov/payments/direct-pay
You can access this online on the IRS website and IRS does not charge a processing fee. Direct Pay handles numerous
payments related to Form 1040, such as balance due payments, estimated payments and extension payments
It is only 5 steps. - You can also pay online using EFTPS.gov. You can schedule all your estimated tax payments at the same time. There
are no processing fees but you must enroll with EFTS
If you own a second home and and sell it at a loss does it have to be reported?
A second home that you used for personal purposes (i.e., not as a rental property) is a personal asset. As such, loss on the sale of a second home is not tax deductible. However, if you received Form 1099-S, Proceeds from Real Estate Transactions, you should report the transaction on Form 8949 and Schedule D because IRS computers will be looking for your reporting. In column (f) of Form 8949, you should enter adjustment code L to indicate you have the nondeductible loss and enter the amount in column (g), so no gain or loss is shown on the transaction in column (h).
6-29-22 JK Lasser
How do I report the sale of my second residence
Your second residence (such as a vacation home) is considered a capital asset. Use Schedule D (Form 1040), Capital Gains and Losses and Form 8949, Sales and Other Dispositions of Capital Assets to report sales, exchanges, and other dispositions of capital assets
6-29-22 IRS FAQs
What is the penalty for paying federal personal income taxes late
Penalty for underpayment is 0.5% of unpaid balance for each month or part of a month there is and unpaid balance up to a maximum of 25%. The penalty is half the usual rate for any months an installment agreement is in effect.
Source:
Quickfinder: References IRC Sec. 6651(a)(2)
In 2022 how can be gifted to others
16K per year can be gifted tax free to as many individuals as you please. Savvy TP used a plan of gifting annually up to 16k to reduce taxable estate at death
Who has to file a federal tax return
For 2021:
FILING STATUS AGE AT EOY GROSS INCOME
Single Under 65 12,550
65 or older 14,250
HOH Under 65 18,800
MFJ < 65 both 25,100
65 & > 1 sp 26,450
65 & > both 27,800
MFS any age $5 ??
QW Under 65 25,100
65 or older 26,450
Gross income is all income your received that isn’t EXEMPT from tax, including income from sources outside the US. Don’t include SS unless you’re MFS
How does a donor advised fund work
A donor advised fund allows you to make a contribution and you lose control of your money but you can still direct where you want your money to go. It’s good because it allows you to time your gift for a tax deduction but then identify the charity at a later date. It’s a miniature version of a private foundation. It allows you to accelerate your giving and avoids capital gains. You get tax deduction for the FMV of the gift and can later choose your charity.
What is the safe harbor for avoiding underpayment penalties
The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year. The safe harbor amount for high income taxpayers is paying in 110% of the previous year’s tax. A high income taxpayer is one whose previous year’s adjusted gross income was $150,000 or more ($75,000 or more if you were married and filing a separate return). If you owe less than $1,000 the IRS will not charge you
Source: Google
What are the requirements for filing as head of household?
- Pay for more than half of household expenses
- Be considered unmarried on last day of year
3 Must have a qualifying child or dependent
In general to be a TP QC must meet four test
1 Relationship – the taxpayer’s child or stepchild
foster child, sibling or stepsibling, or a descendant
of one of these. - Residence - has same principal residence
- Age - under age of 19 at EOY or under 24 if FTS
- Support - did not provide more than half
IF a child is claimed as QC by two or more TP in a given year, the child will be the qualifying child of:
* The parent
* The parent with whom child lived the longest
Can you hire your kids to work in your business and what are the considerations
Yes and you can also contribute to IRA / or Roth IRA
However it must be for legitimate work and documented
FICA taxes are not required to be withheld for Sch C or partnership that is solely owned by TP & spouse. For an S-Corp or C-Corp you must withhold FICA which is 15.3%.
You can pay children up to standard deduction without them having to file a tax return ($12,950 for 2022) provided no other income. If you give them a 1099 they will be required to pay FICA regardless of the entity type.
Info Sources: YTV: Tax Smart R.E Inv / Ask a CPA / Karlton Dennis
What is the parsonage allowance and how is it reported and how is it taxed?
Chat 3.5
The parsonage allowance is also known as the housing allowance.
The designated housing allowance amount is excluded from the minister’s taxable income for federal income tax purposes. This means the excluded amount is not subject to federal income tax, Social Security tax, or Medicare tax.
The housing allowance cannot exceed the lesser of the following:
* Actual amount spent on housing , such as rent, mtg interest, utilities and property tax
*
What is the maximum capital gains tax rate for 2023:
Source: Google:
Long-term capital gains tax rates for the 2023 tax year
In 2023, individual filers won’t pay any capital gains tax if their total taxable income is $44,625 or less. The rate jumps to 15 percent on capital gains, if their income is $44,626 to $492,300. Above that income level the rate climbs to 20 percent.
Can the standard deduction create a NOL:
Pub 536, NOLs for Individuals, estates and trust
You may have an NOL if a negative amount appears in these cases. Individuals—You subtract your standard deduction or itemized deductions from your adjusted gross income (AGI).
Best way to determine if you have an NOL is to complete worksheet 1 in Pub 536: Figuring your NOL
What are qualified education expenses
irs.gov
For AOTC only, expenses for books, supplies and equipment the student needs for a course of study are included in qualified education expenses even if it is not paid to the school. Even if you pay the following expenses to enroll or attend the school, the following are not qualified education expenses:
Room and board
Insurance
Medical expenses (including student health fees)
Transportation
Similar personal, living or family expenses
Who Must Pay
Qualified education expenses must be paid by:
You or your spouse if you file a joint return,
A student you claim as a dependent on your return, or
A third party including relatives or friends.
When can you take suspended losses
Suspended passive losses are the passive losses you could not deduct in the current year. These suspended passive losses can be carried forward indefinitely until you either use them to offset passive income or dispose of your rental property.
