R1 Individual Tax- Income Flashcards
Extensions to Due Date
Automatic 6month extension -Oct 15
Avail to those who couldn’t file before. Must be requested by April 15. no extension on pmt
Out of the country automatic 2 month
need not file for extension but must include documentation
Filing Status Types
Single MFJ MFS Qualif Widower Head of Household
Head of Household requirements
have a dependent either child or parent
if non relative they must live with you HALF of the year
if in nursing home -half year - parent
child- have a home for them HALF year
Qualifying Widower Requirements
can use for 2 years after death
the year of death you use MFJ
must have a dependent child you live with for WHOLE year
Qualifying Child Requirements
Close relative - child Age - 19/24 full time student Residency - US, MX, Can Eliminate GI- not apply...kiddie tax Support - provide >50%
Qualifying Relative Requirements
Support - >50% you provide
Under 3,800 (their income) - SS bens dont count if only income they receive.
Precludes MFJ - they cant MFJ unless just to get a refund
Only Citizens- US,MX,CD
Relative - must be OR
Taxpayer lives with person (if not relative)
4 Baskets of Income
Ordinary
Portfolio
Passive
Capital
Life Insurance Proceeds
EXCLUDE bens rec’d up to premiums paid
excess over premiums paid is taxable
exceptions: family member
Employer Paid Health,Medical,Accident Insurance
Premium pmts EXCLUDED from income BUT amounts paid to employee are included UNLESSS
reimbursement for medical exps actually incurred OR compensation for loss of member
Meals and Lodging
EXCLUDED from GI if for the convenience of employer.
50% excludable from Bus expenses (Sched C)
Employer Paid Educ Exps
EXCLUDIBLE up to 5250
Tuition Reductions
EXCLUDIBLE if teach/research and you get compensation for that separately. Then that is taxable and your reduction is NOT
Qualified pensions
Pmts by employer NOT taxable
benefits received TAXABLE
Flexible Spending Arrangements
Salary reduction deposited into account.
can be used to pay meical or dependent exps
deposited pretax
Tax Exempt interest income
State/local bonds or obls
US bonds
EE bonds (conditions apply)
Veterans Admin Insurance
Series EE -> educational expesnes -> Requirements for exemption (to not include in GI)
be used to pay for higher education (reduced by tax free scholarships)
there is taxpayer or joint ownership
taxpayer is >24yrs old
acquited afer ‘89
Series EE bonds exemption phase out
begins at 72850 Single &HH
109,250 MFJ
Kiddie Tax
0-950 -> 0%
950-1900 -> child’s
1901 and over - Parent’s %
parents can include in theirs if it’s solely dividends and interests and it is between 950&9500
Taxable Dividends
special rate
15% most ppl
0% if in 10/15 bracket
NONtaxable dividends
Return of capital
Stock Split
Stock Dividend
Life Insurance Dividend
Alimony
Included & Deductible Reqs: legally required in cash not beyond death designated as alimony they dont file MFJ with each other
Child Support
NOT included & NOT deductible
Property Settlement
NOT included &NOT deductible
Bus Expenses
COGS Saliers and commisions TO OTHERS state/local taxes paid actual car expenses &mileage 50% meal and entertainment depr on bus assets interest expense on bus loans (not deducted until the year that it applies to) employee bens legal and Prof fees bad debts actually written off
NON deductible Bus Exps
Salaries paid to proprietor
federal income tax
personal portion of:
car, travel, personal meals, interest expense (itemized if mtge interest of invmt interest), state/local tax expense (itemized), health insurance of proprietor ( adjustment NOT deduction)
Net Business Income taxes
2 taxes: Income tax & SE(federal) tax 7.65 of 110,100 \+1.45 of rest also all income subj to 2.9 medicare & 12.4 SS only up to 110,100
Business Operating Loss
Back 2 years
FWD 20 years
Uniform Capit Rules
applies to property produced for sale/use & acquired for resale
costs to capit DL, DM, OH
costs NOT capit SGA, R&D, Mkting
LT contracts income recog
use %completion unless exception
exceptions: small contractors (<10M) & Home construction contractors
Allocate costs directly associated. NOT SG&A,RD,Mkting
dont have to allocate if if small of home contractor
Production period
Starts: when incurred (cash ppl) OR earlier of when incurred or 5%incurred (accrual ppl)
ENDS when complete or when 95% costs incurred
IRA income & penalty tax
req’d to receive by 70.5 yrs old
can receive after 59.5 yrs old
if withdraw before 10% penalty
it is taxable @receipt
ROTH IRA
bens rec’d up to invmt amouont are NOT taxable
TRADITIONAL
principal is NONtaxable. earnings taxable
Penalty Tax exemptions
HIMDEAD house - up to 10k Insurance - when SE or unemp for 12 mots Medical exces of 7,5AGI Diasibility Education Death
Annuities
invmt amount/factor = amt excludible
amount above that number is taxable
if you die before you get all -> itemized deduction on ur dead return
Rental Property when is it personal and when mixed?
rented 15 days and personal GREATER OF 14 days or 10%of rental days - personal/rental- allocate exps
- – taxes and interest -> over annual
- –util/depr/repair –> over usage
PAL exemptions
MOM&POP
actively participate &own >10%activity
deduct 25k-> phase out after 100k-> reduce by 50% of excess over 100k
REAL ESTATE PROFESSIONAL
PAL not passive anymore. can deduct agains other income. more than 50% svces come from real estate & do more than 750 hrs in it
SS icnome, includible or not?
INCLUDED depending on provisional income (AGI+taxempt int+50%SSbens)
34% -> 85% included
MFJ instead of 25 ->32. Instead of 34 ->44
NONtaxable Misc items
Life insurance proceeds -only interest part Gifts&inheritance medicare workers comp- sick and injury injury and illness accident insruance premiums paid by you Foreign income
capital assets
personal car furniture and fixtures stocks and secs (except those held by dealers) personal prop NOT used in business Real property NOT used in business interest in partnership Goodwill of corporation copyrights PURCHASED assets held for investment
NONcapital Assets
stuff in inventory OR held for sale depreciable assets (S1231,1245,1250) AR & Notes Receivable Copyrights held by original person Tstock
Gifted property calculations
Basis = donor’s basis UNLESS fmvs basis
if that the case then it depends on Future SP
Inherited Property
basis=FMV@death UNLESS Alt Val Date is chosen
that is either 6 mths after deaht OR distrib date. whatever comes first
Related party transactions
Your basis depends on what you sold it for.
compare old basis, PP & SP
Excludible GAINS
HIDEIT
Home exclusion -250 single, 500 MFJ
Involuntary - include portion not reinvested.
Divorece settlements - exclude
Exch Llike kind - gain only if booth rec’d
Installment sale - recog when cash rec’d using GP%
Tstock transactions
Exch Like kind Prop basis & gain recog
basis= old basis +boot give - boot recd + gain recog
Gain recog = LESSER OF gain realized or boot recd
NONdeductible Losses
WRaP
Wash sale Loss - you sell at a loss within 30 days you repurchase. Portion repurchased disallows loss. add disallowed loss to basis of repurch stock
Related Party Tran- losses when selling to reltive (not inlaws) are disallowed
Personal loss - no deduction- maybe itemized deduc for casualty or loss
Cap gains & losses treatment for people
Net losses with Gains first within %group and then in order first agains high group and then lowest group
max deduction of 3K carryF forever
Cap gains & losses treatment for corporations
only deductible agains capital gains NOT agains ordinary income
carryB 3 yrs, carryFWD 5 yrs
Employee Stock Option Types
NONQualified - taxed to empyee -- value Ascertainable - taxed @grant --value NOT ascertainable - taxed @exer basis =exerprice +amt prev paid Qualified - NOT taxed to employee --ISO --ESPP
Incentive Stock Option (ISO) Reqs & Charac
-granted within 10yrs of EARLIER of appvd or adopted
-exerprice NOT 10%
-hold 2 yrs after grant and 1 yr after exer
-remain employee from grant to 3 months before exer
CHARACS
-no tax on employee
-G/L ord if HP reqs not met
-basis= exerprice +amt paid before
-lapse- no deduction, maybe loss if paid money before
-can exer UPTO100K
-excess FMV exer-PP= AMT preference
Employee Stock Purchase Plan (ESPP) Reqs & Characs
REQS
- written and approved
-cant own >5%
-exer price NOT < LESSER OF 85%FMV@grant or @exer
-cannot exer after 27mths
-cannot purch >25k pr year
-hold 2 yrs after grant and 1 year after exer
-remain employee from grant date to 3 moths before
CHARACS
- NO TAX on employee
-G/L ord if HP reqs not met
-basis= exerprice +amt paid before
-lapse-no deduction, maybe loss if paid money
- if option price <FMV@grant then Ordinary income recog = lesser of diff bet FMV@sale&exerprice
OR diff FMV@grant&exerprice
