R2 - Adjustments and Itemized Deductions

Question 1

What are the Adjustments for AGI?

Answer 1

• Educator Expenses (exp. 12/31/13)
• IRA
• Student Loan Interest Exp
• Tuition & Fee Deduction (exp 12/31/13)
• Health Savings Account
• Moving Expenses
• 50% Self-Employment FICA
• Self-Employed Health Insurance
• Self-Employed Retirement
• Penalty on early withdrawl of savings
• Alimony paid
• Attorney feeds paid in certain discrimination and whistle-blower cases
• Domiestic productoin Activity Deduction

Question 2

Are contributions to a regular IRA deductible?

Answer 2

Yes, contributions to a regular IRA are deductible to arrive at AGI.

Question 3

What are the tax considerations of a regular IRA?

1. Are contributions deductible?
2. Are earnings taxable or tax-free?
3. Are withdrawals taxable or tax-free?
4. What are the eligibility requirements for being able to contribute to a regular IRA?

Answer 3

1. Yes, contributios are tax deductiblee
2. Earnings accumulate tax-free (tax deferred)
3. Withdrawals are taxable as ordinary income
4. To be eligible for this type of IRA:
   
   1. AGI must be within these limits:
      
      1. Single: $60K
      2. HOH: $70K
      3. Joint: $96 - $116K
   2. Cannot be active participant in another qualified plan

Question 4

Formula for non-business casualty losses

Answer 4

Decline in FMV up to property’s basis

< $100>

= Balance

< 10% AGI>

= Deductible casualty loss

Question 5

What are the tax considerations for Roth IRAs?

1. Are contributions deductible?
2. Are earnings taxable or tax-free?
3. Are withdrawals taxable or tax-free?
4. What are the eligibility requirements?

Answer 5

1. No, contributions are not deductible
2. Earnings accumulate tax-free
3. Withdrawals are tax-free (both principal and earnings)
4. To be eligible modified AGI must be within these limits:
   
   1. Single: $114K - $129K
   2. Joint: $181K - $191K
   3. MFS: $0 - $10K