R2 Flashcards
Non refundable tax credits
Child and dependent care credit Elderly and permanently disabled credit Education Retirement savings Foreign tax General business Adoption
Refundable credits
Child tax credit Earned income credit Withholding taxes (W-2) Excess Social Security paid American opportunity credit
Statute of limitations: How many years does IRS normally have to audit your return?
3 years after payment was made or the due date, whichever comes later
When does the IRS have 6 years to audit your return?
When the return omits more than 25% of gross income originally reported
When does the IRS have unlimited time to audit your return?
When there is fraud or it is a false return
When is the deadline for filing a refund claim?
Two years from the date the tax was paid or three years from the time the return was filed, whichever is later
How much is deductible for eligible educator expenses?
250 single or 500 married, eligible educator expenses are kindergarten through grade 12 teacher with 900 hours
Traditional IRA’s are deductible unless
The taxpayer has excessive AGI and is an active participant in another qualified plan
What is the maximum one can contribute to Coverdell Education IRA’s?
2,000
What is the limit on Student Loan Interest Expense adjustment?
2,500
Who qualifies for medical expenses paid for itemized deductions and what % of AGI must you subtract off?
Payments qualify for filing taxpayer, spouse, and dependent who received over half of support, payments can be paid or charged during the year, and you must subtract any insurance reimbursements and then the 10% of AGI.
What are nondeductible moving expenses?
Meals, pre-move house hunting, breaking a lease, and temporary living expenses
What % of social security and medicare tax is deducted to arrive at adjusted gross income?
50%
Maximum allowable Keogh deduction?
20% of self employment income (business income - business expense - 1/2 self employment tax)
Rules on Alimony payments
must be legally required under a written divorce agreement, must be in cash or its equivalent, and cannot extend beyond the death of the payee-spouse.
Rules on Child support
It is nontaxable and payments first go to this before they go to alimony
How much are the additional deductions for the elderly and/or blind?
single is 1550 or married is 1250 per person per handicap
Who qualifies for medical expenses and what % of AGI must you subtract off?
Payments qualify for filing taxpayer, spouse, and dependent who received over half of support, payments can be paid or charged during the year, and you must subtract any insurance reimbursements and then the 10% of AGI.
What are the deductible taxes on itemized deductions?
Real estate taxes, income taxes, personal property tax, and sales tax (may elect to deduct either state and local income taxes OR sales tax)
What taxes are nondeductible?
Federal taxes, inheritance taxes for states, business and rental property taxes (FIB)
What kind of interest is deductible?
Home, Investment, and Prepaid
What qualifies as miscellaneous itemized deductions with the 2% AGI test?
Unreimbursed business expenses (Meals/Entertainment expensesand transportation expenses), educational expenses, subscriptions to professional journals, tax preparation fees, debit card convenience fees, expenses of investors – Safe deposit box and investment advice, business gifts, uniforms
Educational Loan Interest
Is an adjustment and max is 2,500
What is the maximum allowable deduction for charitable contributions?
50% cash or 30% FMV property.
