R2 - big topic 1/2 - individual and itemized deductions - adjustments and itemized Flashcards
13 adjustments
- educator expenses (250)
- IRA
- Student Loan interest expenses
- Tuition and fee deduction
- Health saving account
- Moving expenses
- 1/2 self employment FICA
- Self employment health insurance
- self employment retirement
- Interest Withdrawal penalty
- Alimony Paid
- Attorney fees paid in certain discrimination and whistle-blower cases
- Domestic production activities deductions
Adjustment - 1. Educator Expenses
- Deduction - 250; if mfj, 500
- eligible educators - teachers, instructors, counselors, principal.
- Qualified Expenses - ordinary and necessary expenses for books, supplies and equipments
Adjustment - 2. IRA (individual retirement account)
- Traditional IRA (Deductible)
four different of IRAs
- Deductible IRA
- nondeductible IRA
- Roth IRA
- Coverdell Education Saving account
- Traditional IRA
contribution - tax fee -> earning tax deferred
withdrawal -> taxable at ordinary income tax
EXCEPTIONS -
Cannot deduct IRA if two conditions (must have both)
1. Excessive AGI (rich: AGI = 60,000 single; AGI = 70,000 HoH; AGI = 96 - 116,000 MFJ)
2. you are in other retirement plan
if you have those two, you cannot deduct IRA.
IRA Deduction
lesser of 5,500 or individual’s compensation
married - 11,000
Contribution limits = 5,500
Compensation?
- salaries, wages, commissions, bonuses, and alimony
- NOT interests, dividends, annuity income,pension
Contribution limits = 5,500
Distribution (principal) = taxable
Distribution (accum. earning) = taxable
Adjustment - 2. IRA (individual retirement account)
- Roth IRA
no tax impact
- no deduction contribution
- non tax accumulative earnings
- non tax when distributing
Contribution Limits
Single 5,500
Married 11,000
**overall limitation = roth IRA + traditional IRA = 5,500 limit
Distribution
tax free
Contribution limits = 5,500 (combining with traditional IRA
Distribution (principal) = nontaxable
Distribution (accum. earning) = nontaxable
Adjustment - 2. IRA (individual retirement account)
- Nondeductible IRA
contribution limitation lesser of - 1) 5500 2) individual compensation 3) limit not contributed to other (regular or roth) IRAs
Tax free accumulation of earnings
contribution -> accumulation -> tax-free (tax deferral) until withdrawn
Distribution
taxable - accumulated earning (tax deferral)
nontaxable - principal (not deducted when contributed)
Contribution limits = 5,500
Distribution (principal) = nontaxable
Distribution (accum. earning) = taxable
No phase-out - 最后的归属
Adjustment - 2. IRA (individual retirement account)
- Coverdell Education (education IRA)
Education IRA = a separate education saving account
Contribution = non deductible and MAX contribution is 2000
Tax free accumulation of earnings
Tax free distributions (both principal and interests are tax free)
**distribution (tax free) -> must use on qualified education exps (tuition, fees, tutoring, books, room and board)
time limits -> 30 years
forms of distribution
-> taxable to beneficiary
-> rolling into another family member is tax free.
No limit on the number of beneficiaries. (each one has a separate account)
has phase-out for taxpayer
Contribution limits = 2,000 (not combining with any IRA)
Distribution (principal) = nontaxable
Distribution (accum. earning) = nontaxable
除了Roth IRA以外的一个 没有tax impact的IRA
Adjustment - 2. IRA (individual retirement account)
Catch up IRA
Age over 50
allowed additional contribution of 1000 for Traditional IRA
Contribution limits = 1,000
Distribution (principal) = taxable
Distribution (accum. earning) = taxable
Adjustment - 3. Student loan interest
Max = 2,500
Any additional student loan = personal interest (no deduction, just loss)
has phase out AGI
Adjustment - 4. Tuition and fees deduction
does NOT matter if it is work-related or not.
MAX = 4,000
has phase out with AGI
Adjustment - 5. Health Saving Account (HSA)
HSA
Max pretax contribution = 3,250
6,450 for family
additional 1000 (catch up) for those over 55+ age
Adjustment - 6. Moving expenses (must be work related)
work related moving
- must move 50+ miles
- 39 weeks stay (75% of next year) staying in new home
- Only DIRECT moving costs
include: travel and lodging of the taxpayer and his family; transporting household goods and personal effects
Not include - MEALS!, pre-move house hunting, expense of breaking a lease, temp living expenses.
Adjustment -
- tax on self-employment
- self-employed health insurance
- Keogh (profit sharing) plans
- tax on self-employment (50% deductible) -> Boss Half
- self-employed health insurance (100% deductible)
- Keogh (profit sharing) Plans
Lessor of 52,000 or 25% of Keogh (self employed) earnings)
Where to find the Keogh self earnings?
= 20% of Self-employment income (after 1/2 self employment but before the Keogh)
Adjustment
10. Penalty on early with withdrawal of SAVINGS
back to R1 - page 23
this is a adjustment. Do not net against your taxable income (不要在income里面减 在adjustment里减）
Adjustment
11. Alimony to Payers
- alimony support
income to receiver
adjustment to payor
alimony must
- legally required
- in cash
- not beyond death
- child support
- tax free for receiver
- non deductible for payor
* *aka no tax impact - property settlement
**aka no tax impact
HIDE IT - D
payment (or aka cash received) applied FIRST to child support. then alimony support
Adjustment
12. attorney fees paid in discrimination cases
13, domestic production activities
- attorney fees paid in discrimination cases
- domestic production activities
just know the names of those two adjustments
