R1: Individual Tax --Income Flashcards

1
Q

Qualifying widower

A

Must maintain household for whole taxable year, which was principle place of abode of dependent child. May use joint return standard deduction for 2 years following the year of spouse’s death.

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2
Q

Dependency Exmptions

A

2016 $4,050

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3
Q

Qualifying Child (CARES)

A
  • Close relative
  • Age Limit (19/24 college)
  • Residency and Filing Requirements (live there more than 1/2 year)
  • Eliminate Gross Income Test
  • Support test changes
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4
Q

Qualifying Relative (SUPORT)

A
  • Support (over 50%) test

- Under a specific amount of (taxable) gross income test (

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5
Q

Rental of Vacation Home

A
Basic Formula:
Gross Rental Income
Plus: Prepaid rental income (Non-refundable Deposits)
Plus: Rent Cancellation Payment
Plus: Improvement in Lieu of Rent (FMV)
Less: Rental Expense
Equals: Net Rental Income(Loss)
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6
Q

Rented less than 15 days

A

Treated as personal residence (income is excluded)

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7
Q

Rented 15 or more days

A

Expenses are prorated, rental use expenses are only deductible to extent of rental income.

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8
Q

Individual Tax Calculation

Taxable Income

A

Gross Income
Less: Adjustments
Equals: AGI

Less: Standard or Itemized Deductions
Less: Exemptions
Equals: Taxable Income

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9
Q

Individual Tax Calculation

Taxable due or refund

A
Federal Income Tax
Less: Tax Credits
Plus: Other Taxes
Less: Payments
Equals: Tax due or refund
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10
Q

Adjustments (Taxable Income Calculation)

A
  • Educator Expenses
  • IRA
  • Student loan interest expense
  • Tuition & Fee deduction
  • HSA
  • Moving Expenses
  • One-half Self-employment FICA
  • Self-employed health insurance
  • Self-employed Retirement
  • Interest withdrawal penalty
  • Alimony paid
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11
Q

Itemized Deductions

A
  • Medical (in excess of 10% of AGI)
  • Taxes - State/local
  • Interest Expense (home and investment)
  • Charity (up to 50% of AGI)
  • Casualty/theft (in excess of 10% of AGI)
  • Misc (in excess of 2% of AGI)
  • Other Misc
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12
Q

Gross Income

A
  • Wages
  • Interest (interest on state gov’t obligations are NOT taxable)
  • Dividends
  • State tax refunds
  • Alimony Received
  • Business Income
  • Capital Gain/Loss
  • IRA Income
  • Pension and Annuity
  • Rental Inc/Loss
  • K-1 Inc/Loss
  • Unemployment Compensation
  • Social Security Benefits
  • Other Income
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13
Q

Uniform Capitalization Rules

A
  • Capitalized as Inventory:
    1. Direct Materials
    2. Direct Labor (compensation, vacation, taxes)
    3. Factory Overhead (utilities, warehousing, repairs, maintenance, indirect labor, rents, storage, dep/amort, insurance, pension, engineering/design, repackage, spoilage)
  • Period Expense:
    1. SG&A
    2. Research & Development
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14
Q

Social Security Income

A
  • Low Income= No Social Security benefits are taxable (income below: $25k/single or $32k/MFJ)
  • Lower Middle Income= Less than 50% of SS benefits are taxable.
  • Middle Income= 50% of SS benefits are taxable (income over $25k/single or $32k/MFJ)
  • Upper Middle Income= Between 50% and 85% of SS benefits are taxable.
  • Upper Income= 85% of SS benefits are taxable (income over $34k/single or $44k/MFJ)
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15
Q

Life Insurance

A

Group term life insurance is a nontaxable fringe benefit for the first $50k. The cost of amount exceeding $50k is considered taxable.

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16
Q

Mom and Pop Exception

A

Passive activity losses of up to $25k are allowable (w/o having to net against passive activity gains).
Any excess is carried forward indefinitely.

Phase out: $25k is reduced by 50% of excess of the AGI over $100k (eliminated when AGI>$150k).