R1, May Your Soul Rest Easy Flashcards
What is the basic Tax Formula?
Gross Income LESS: adjustments =AGI LESS: Std Deduction OR Itemized Deduction =Taxable Income before QBI LESS: QBI Deduction =Taxable Income x Federal Rate =Federal Income Tax LESS Tax credits ADD: Other Taxes LESS: Payments =Tax due/refund
What is the riteria for claiming head of household
Not married, legally seperated, or is married and has lived apart from spouse for the last six months of the year..
Not a qualifying widower
Maintain a home, that for over half the tax year is the principle residence of a: Dependent child, Dependent relative, dependent mother/father (this one is regrdless of if they live with the person, think nursing home)
What are the qualifications to file as a widower
Unmarried at the end of the tax year.
AND
Surviving spouse must maintain a household which for the whole year, was the main house for a dependent son/daughter/step S/D
ANDDDD
This qualification is good for two years after the spouses death.
What are the requirements for a qualifying child
CARES
Close Realtive Age Limit (19 or 24 and under in college) Residency and filing requirement Eliminate gross income test Support Test (over half)
What are the requirements for a qualifying relative
SUPORT
Support (>50%) Test
Under specific amount of gross income (<4200)
Precludes dependent filing a joint tax return test
Only Citizens
Relatives Test OR
Taxpayer lives with individual for whole year test (if non-relative)
Name requirements for a multiple support agreement
Two+ people together provide more than 50% of support, but individually, nobody provides more than 50%
To claim as a dependent, a person must provide more than 10% support as well as other dependency tests
File a 2120 form
When does a cash basis tax payer report income
in the year it is either actually or constructively received…can be either in cash or property (Cash and cash equivalents)
What are the 4 types of income for a person
COPP
Capital
Ordinary (Wages)
Passive (real estate, limited partnership, S Corp)
Portfolio (Dividends or interest)
Gimme examples of non tax fringe benefits
De minimis
Tuition reduction
Employee Discount
Employer paid accident, medical, or health insurance
lemme ask you…are life insurance premiums taxable to employees
WELP yes and no…the first 50,000 of group term is not includable in gross income…BUT anything over 50k should be included
So uhhhh gimme examples of exempt interest
State/local bonds
Bonds of a US possession (puerto rico)
Series EE if used for higher ed
Interest on Veterans shiz
What is the deal with taxes on property settlements from a divorce
transferring spouse gets no deduction for payments made or property transferred, and the payments aint includable in gross income for spouse receiving shit…this is the case no matter what time period
The fuck you gotta do to deduct alimony and so the other person can make it includable
PRE 12/31/2018 CAN RECOG AS INCOME/DEDUCT AND TO BE ALIMONY IT:
written decree of payments
Must be in cash or cash equiv.
Payment cant extend beyond death of recipient
Cant pay member of same household
No joint returns
AYOOOO
Before any alimony is paid/recognized…child support gets priority…think of it as the primary bucket that must be fillled up)
When are the funds in a nondeductible traditional IRA taxable
withdrawls are partially taxable
When withdrawn, the principal payments arent taxed, but the earned interest (the gain)…is
Allocated on pro rata basis to determine amount
How the F you find the excludable part of a annuity
Investment in contract / Age Factor ( in months)
If that MF lives longer tahn the factor in months, further payments are fully taxed…if they die before full payments collected, the uncollected shit is a misc. itemized deduction on that dead persons last return.
In a premature distribution of an IRA, what are the exceptions to the penalty tax
HIM DEAD
Home buyer (first time, 10,000 max within 120 days)
Insurance (medical) unemployed with 12 consecutive weeks of unemployment comp. or self employment
Medical expenses in excess of 10% AGI
Disability
Education
And
Death
How the hell do you determine social security benefits
its broken out by AGI plus tax exempt interest plus 50% SS benefits…
Low income (<25,000 S , 32,000 MFJ) means no SS benefits are taxed
Lower Middle Income means less than 50% of SS is taxed
Middle Income (OVER 25000 S, 32000 MFJ) 50% of SS is taxed
Upper Middle Income means between 50% and 85% of SS is taxed
Upper income (Over 34,000 S, $44,000 MFJ) means 85% of SS benefits are taxed
Are scholarships and fellowships gross income
if degree seeking, they are excludable up to the amount spent on tuition, fees, books and supplies. All reamining amounts are includable in grosss income.
If non degree seeking all amounts are includbale in income.
Qual es the tests for foreign earned income exclusion
Bona Fide resident (whole tax year)
Physcial presence (330 full days out of 12 consecutive months)
Gimme some them nontaxable misc. income items (exclusions)
life insurance proceeds Gifts/inheritence Medicare benefits workers comp personal injury/illness award Accident insurance foreign earned income exclusion
The heck is the self employment tax
all net SE income is subject to 2.9% medicare, but only SE income up to 132,900 is subject to 12.4% SS tax
What does the uniform capitalization rules apply to
real or tanigble personal prop produced by the taxpayer in the trade or business
Real or tangible personal prop produced by tax payer for consumer (inventory of manufacturer)
Real or tangible personal property purchased by the tax payer for resale (retail inventory) but only if gross receipts are over 25 million annually oer the past 3 years
How is rental income from a vacation jaunt handled
if rented less than 15 days, its a personal jaunt
If rented more than 15 days and personal use is the greater of 14 days or 10% of days rented, allocste rental expenses to the extent of rental income
If rented 15 or more days, and personal use is not more than 14 days or 10% of days rented: its a rental prop.
So for rentals, if its considered personal prop, what is going on compared to if its a rental talkin bout deductions and income
if its a personal, income is excluded and deuctions for mortgage interest and taxes are put on Schedule. A and other expenses aint deductible…
If its a vacation property/rental the taxpayer reports income and deductions on Sched. E
wtf ar ethe 4 categories of business entities
partnership
S corp
Sole Proprioetorship
C Corp
Talk me through the tax treatment of guaranteed payments
they are distributive deductions to the partners via the partnership K01 and also taxable income to the partner receiving the payments
The frick is fiduciary accounting
used in estates and trusts…it is focused on the classification of all receipts and disbursements as either principal or income
What is a passive activity and gimme some examples
any activity where the tax payer does not materially participate
Rental activities, interest in limited partnerships, and S corps are examples.
Tax treatment of nondeductible passive activity losses
nondeductible passive activity losses are unusef passive activity losses which are held in suspension
USed to offset passive income in future years (FOREVER)
Fully tax deductible in year the property is disposed of or sold
Lemme hear the employer employee taxation of nonqualified employee sock option
employee taxation: if there is a readily ascertainable value, the employee recognizes ordinary income in the year it was granted.
If there is no readily ascertainable value, employee recognizes ordinary income based on FV of the stock purchased less any amount paid for the option on the excersise date.
Employer Taxation: employer may deduct the value of the stick otion as a business expense in the same year the employee recognizes ordinary income
walk me through the employee and mployer taxation of incentive stock options (ISOs)
Employee: ISOs are not taxed as compensation. basis of stock is the exercise price plus any amount paid for the option.
Employer: no deductions received.
walk me through the employee and mployer taxation of employee stock purchase plans ( ESPPs)
Employee: not taxed as compensation. Basis of stock is the exercise price plus any amount paid for the option.
Employer: nNo tax deductions
Out of alimony child support and property transfer…what is able to be taxed as income/deducted
Alimony if its pre 2018
BUT NEVER child suppport or property shit
what does the unifrom capitalization rules impact wiht regard to inventory
DM DL MOH
PERIOD COSTS NOT INCLUDED
So there are three buckets to QBI deductions: The first bucket states:
Taxable Income at or below 160,700 S or 321,400 MFJ has what ype of QBI deduction for QTB and SSTB
If QBI –> Full 20%
If SSTB –> Full 20%
THEY SAME
So there are three buckets to QBI deductions: The second bucket states:
Taxable Income at or above 210,700 S or 421,400 MFJ has what ype of QBI deduction for QTB and SSTB
QTB –> Full W-2 Wage and property limitation applies which is greater of: 50% of W-2 OR 25% W2 plus 2.5% of unadjusted basis of all qualified property
If SSTB NO QBI deduction
So there are three buckets to QBI deductions: The third bucket states:
Taxable Income BETWEEN 160,700-210,700 S or 321,400-421,400 MFJ has what ype of QBI deduction for QTB and SSTB
QTB –> Phase in of W-2 wage and property limitation (if limitation is less than 20% of QBI)
DO: REduction amount = excess amount x phase-in %
THEN: Reduced QBI Deduction = Tentative QBI deduction (20% WBI)- Reduction amount
SSTB –> QBI, W2 wages, and ualified propery amounts are reduced, then phase in W2 wages and proerty limitation using reduced amounts
WHat is the general limitation to the QBI deduction rule
once qbi has been calculated, the deduction can be the lesser of combined QBI OR 20% of the taxable income in excess of capital gain
So you are a part of a partnership (get paid a guaranteed amount) as well as an S corp…what income gets hit by the SE tax?
just the partnership amount
What determines if you a state refund is taxable
if you did itemized in taht year, its taxable…if you did standard, its not
IF it was itemized, you report income up to the extent to which the Itemized was over the standard
Walk me through this QBI problem: Person is a QTB, single 183,200 inc. no gains QBI is 80,000 W-2 wages were 20,000
whats the deduction
1/50,000 = Phaseout %
Taxable Income - Threshold of 160,700 = #1
Next: QBI x 20% = #2
Next: W-2 Limit x 50% = #3
Next: #2-#3 = Phawe out amount
THEN: Phase-out x Phaseout % = Applied Phase Out
SO: #2 would be full QBI deduction bc its always 20%, but we lessen it by the applied phaseout.
