R2 Individual Tax - Adj, Ded, Cred Pt 1 Flashcards

1
Q

List 13 deductions for AGI.

A
  1. Educator Expense
  2. Self-Employed Health Ins.
  3. IRA
  4. SE Retirement
  5. Student Loan Interest Expense
  6. Interest Withdrawal Penalty
  7. Tuition & Fee Deduction (exp 12/2013)
  8. Alimony Paid
  9. Attorney Fees Paid in Certain Discrimination and Whistle-Blower Cases
  10. HSA
  11. Moving Expenses
  12. One-Half SE FICA
  13. DPAD
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2
Q

Which is a deduction for AGI: Child support or alimony?

A

Deduction for (to arrive at) AGI = Alimony Paid

Child support is not alimony and is not deductible by the payor or taxable to the recipient.

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3
Q

What are the limits on IRA deductions?

A

For IRAs, the lesser of $5,500 or individual’s compensation, with a nonworking spouse, limit is $11,000 provided the combined earnings of both spouses total at lease that much.

Where a spouse is an active participant in an employer retirement plan, the allowable deduction to arrive at AGI is phased out proportionally for modified AGI between $60K (base) and $70K ($96K and $116K for MFJ) [2014]

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4
Q

What are the limits on nondeductible IRAs?

A

The lessor of:

  1. $5,500 for 2014
  2. Individual’s compensation
  3. Limit not contributed to other regular and ROTH IRAs

Earnings on such contributions will accumulate tax-free (deferred) until withdrawn.

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5
Q

What is the time limit on Coverdell Education Saving Accounts (Education IRAs)

A

Any amount remaining when the beneficiary reaches the age of 30 must be distributed.

“Left over funds”

  1. Must be distributed to a beneficiary, are taxable and a 10% penalty is assessed or
  2. Rollover to another family member is permitted with no 10% penalty.
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6
Q

What are the limits on deductible Keogh plans?

A

Keogh plans are for SE taxpayers and their employees.

Deductible amount is lesser of 25% of net earnings from self-employment (after Keogh deduction) and one-half of SE tax or $52,000 (2014)

The max annual additional (contribution) ay exceed the deductible amount for the year.It is limited to the lesser of $52,000 (2014) or 100% net earnings if compensation is less than $52,000.

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7
Q

Describe the SE deduction (“adjustments”) for AGI

A

SE Tax: 50% of SE Tax

SE health insurance: 100% may be deductible

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8
Q

What are the requirements for moving expenses to be deductible?

A
  1. most change job sites
  2. 50 miles move (distance from former residence to a new job site must be 50 miles or more of the distance from former residence to former job site)
  3. Must work in new location for 39 weeks during the 12 months following arrival (if self-employed, 78 weeks during the 24 month period after arrival)

Note: there is a per-mile care allowance or actual out-of-pocket amounts. Meal costs are not deductible.

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9
Q

What is the additional deduction for elderly and / or blind?

A

For 2014, if 65 or older, add $1550 (single or head of house of hold), or $1,200 (MFJ or MFS or Qualifying widow(er)]

If blind, add same amounts as above.

If both are over 65 and blind, amounts are $3,100 and $2,400, respectively.

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10
Q

What TP are not eligible to use the Standard Deduction?

A
  1. One spouse itemizes deductions on a separate return
  2. TP is a duel status or nonresident alien
  3. TP has a short tax year

The SD is limited if TP can be claimed on another person’s return (greater of $1,000 or earned income of dependent plus $350 up to basic SD amount)

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11
Q

What are the major classes of Itemize Deductions?

A
  1. Medical and dental expenses
  2. Taxes paid
  3. Interest paid
  4. Gift to charity
  5. Casualty and theft losses
  6. Misc deductions subject to the 2% floor (job expenses, investment expenses, tax preparation)
  7. Other misc deductions not subject to the 2% floor (gambling losses to extent of winnings)
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