R1: Individual Tax --Income Flashcards
Qualifying widower
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.
Dependency Exmptions
2016 $4,050
Qualifying Child (CARES)
- 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
Qualifying Relative (SUPORT)
- Support (over 50%) test
- Under a specific amount of (taxable) gross income test (
Rental of Vacation Home
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)
Rented less than 15 days
Treated as personal residence (income is excluded)
Rented 15 or more days
Expenses are prorated, rental use expenses are only deductible to extent of rental income.
Individual Tax Calculation
Taxable Income
Gross Income
Less: Adjustments
Equals: AGI
Less: Standard or Itemized Deductions
Less: Exemptions
Equals: Taxable Income
Individual Tax Calculation
Taxable due or refund
Federal Income Tax Less: Tax Credits Plus: Other Taxes Less: Payments Equals: Tax due or refund
Adjustments (Taxable Income Calculation)
- 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
Itemized Deductions
- 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
Gross Income
- 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
Uniform Capitalization Rules
- 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
Social Security Income
- 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)
Life Insurance
Group term life insurance is a nontaxable fringe benefit for the first $50k. The cost of amount exceeding $50k is considered taxable.