R2 Individual Tax - Adjs, Deducs, Credits Flashcards
FOR AGI Deductions
Educator Exps IRA Student Loan int exp Tuition & Fee deduction HSA Moving Exps 1/2Se SE health Se retirement Int withdrawal penalty alimony paid attorney fees- Discrim & Whistle DPAD
Educator Exps
deduct up to 250S, 500MFJ
qualf exps are deducted. those ORDINARY & NECESSARY
IRA contributions - FOR AGI deduction
4 IRAs and 1Keogh Deductible ROTH IRA NoNdeductible Coverdell - savings account
Deductible IRA
Earnings accum TAXFREE
DIstribs- taxable as ordinary income
Deduction - not allowed if RICH&ACTIVE
Rich- >58single, 68HH, 92-112MFJ
>92 first spouse phase out
>173 second spouse phase out
183 both phase out…no deduc
Amt of Deduc - LESSR of 5k or ppl’s COMPEN (not passive)
ROTH IRA
Earnings Accum TAX FREE
Distribs TAX FREE
1st return of capital - not taxed
then distribs of earnings - taxable unless made 5yrs after first cont & other exceptions
NONdeductible
contrib limit, whatever is left of the 5k after cont to trad IRA.
Phase out
S 110-125
MFJ 173-183
MFS 0-10k
Rollovers Reg Tax to ROTH IRAs
no AGI limit affecting transfers
if previously deducted they need to be included now
can’t withdraw until in ROTH for 5 yrs
NONdeductible IRA
Accum Earnings TAXFREE
Distribs TAXABLE earnings not the principal
NONdeuctible
contrib limit
lesser of 5k or compensation
NO PHASE OUT
COVERDELL Educ Savings Acct (IRA type)
Accum Earnings TAXFREE
DIstribs TAXFREE if used to pay qualif educ exps
NONdeduc contribs - MAX CONT 2k
Time limitation
amts left when benef turns 30 must be distrib to someone else or to him.
to soemone else - tax free &no penalty
to him - taxable & 10% penalty
phase out
95-110k
190-220k
benef must be <18k. Max cont 2k per year
Student Loan Int Expense (FOR AGI)
up to 2500 only if used for qualif exps phase out 60-75S 125-155 MFJ
Tuition & Fees deduction
max 4k amt above max -> itemized 2%AGI cant use if you have AOC or LLC or a NONtax educ savings acct phaseout 2k >80 -> zero
HSA (FOR AGI)
mas cont 3k(6250 families)
pretax contributions
taxfree withdrawals
outofpocket limit 5950(11900 families)
ARCHER merdical -used if HSA unavailable
contrib limit 2100 single 4200 fam
max out of pocket 4200/7650 fam
Moving expenses (FOR AGI)
work related
includes cost of moving you and your stuff
lodgning but not meals
Keogh (profit sharing) plans
allowed for SE pppl
max deduc lesser of 50% or 25% net earnings after keogh
max addition
lesser of 50k or 100%net earnings
25%ofSEafterK=20%SEbeforeK
net earnings (keogh)
net earnings from SE - keogh cont- 1/2 SE tax
Standard Deductions (1040ez)
SIngle 5950
HH 8700
MFJ/widow 11900
MFS 5950
Addtl deduction
SINGLE 1450 or 2900
MFJ one person 1150 or 2300
MFJ both 2300 or 4600
standard deduction dependents
GREATER of 950 OR dep’s income +300
Itemized deductions
Medical Taxes Interest Charity Casualty Misc
Medical Exps (itemized)
pmts for you, spouse or deps
only excess over 7.5%AGI
reduced by insurance reimbursement
CAPEX medical
deduct diff bet cost of CAPEX and increase in FMV
State, Local, Foreign Taxes (itemized)
Real estate
Income taxes
Personal prop taxes
Sales taxes
choose to deduct either iincome taxes or sales taxes
NONdeductible taxes
FIB
Federal (inclSS)
Inheritance taxes
Business (sched C) & Rental Property taxes (Sched E)
Interest Expense (itemized) HIPPA
Home Mtge interest
acquisition indebtedness-1M max
Home equity - lesser 100k max or FMV-acq indebtedness outstanding
Investmente Interest Expense
deduc limited to net investment income
Personal interest is NOT deductible
Prepaid interest - deduv over period it relates to not full thing when paid. if rec’d then full thing taxable that year
Educational Loan interest - FOR agi dedu
Charitable conts
cash = 50% AGi
FMV =30%AGI
excess carryF 5 years FIFO
LT prop @FMV
ST prop @basis
Casualty and Theft (itemized)
100 dollar floor
only excess over 10%AGI
loss= lessser of decline in FMV OR basis
must be sudden and unexpected
MIsc Itemized deducs (2%AGI)
Unreimbursed Bus Exps- meals&enter 50% Educ exps - must be work related and maintain or improve uniforms Bus gifts- 25 max employment agency fees exps of investors Subcriptions to journals tax prep fee debit card fees for paying taxes HOBBIES
Hobbies
NO deduction except:
1) that stuff that would be deduc anyways (taxes&interest)
2) stuff that would be deduc if it was a business ONLY to extent of 1)
Personal Tax Credits (NONref)
Child & dependent care Elderly & Permanently Disabled Education -> LLC Retimt Savings Cont Foreign tax General Business
REFUNDABLE Credits
Child tax credit (lmtd refund) Earned Income Credit Witholding Taxes (W2) Excess SS paid LT AMT Credit not used older than 3 yrs, can recoup GREATER of 5k or 20% of unused amt per yr AOC (40%) Adoption Credit
Child&Dependent Care Credit (personal)
credit= LOWEST of lesser income, actual exps, max 3k/6k(2deps)
that X 20or35%
35% if AGI43k
kids ,13 or disabled dependent
if MFJ then both must work or one be fulltime student
Elderly or Disabled Credit (personal)
15%of elig income
for ppl >65 or elig income is REDUCED by
SSpmts &50%AGIthat>7.5ksingle,10kMFJ,5kMFS
BASEAMT (SSpmts Paid) (50% excess over limit) XXXX X15% credit
Education Tax Incentives
AOC
AOC only first 4 years boooks included refundable 40% max 2500 per STUDENT 100%first2k 25% next 2k
phase out
Magi >80k(160)
full phase out at 90k(180)
Education Tax Incentives
LLC
for unlmtd years
books not allowed
2.5k max per year NOT student
phase out at >52k(104)
full phase out at 62k(124)
Education Tax Incentives
Coverdell
can use with AOC or LLC but can’t use for same exps
exclude from GI any distribs
Qualified Tuition Programs QTP
exempt from all taxation
buy credits or make contribs to account on behalf of beneficiary
includes books and room&board
distribs-> excluded from GI to extent it bought qualif exps
Adoption Credit (refundable?)
12650 max per year
phase out 189710 to 229710
for all exps necessary to adopt
spouse’s children dont count
claim for years AFTER pmt made until adoption final
if foreign kids then cant claim until AFTER final
Retirement Savings Cont (NON ref)(offset Regtax & AMT)
avail for conts to ROTH or Traditional
credit = (excess reg tax liab over amt - NONref credits)
max contrib 2k
Foreign taxes Credit
can be itemized (no limit) or credit (limit)
Lesser of taxes paid OR (taxableincomeALLforeign/taxable income&exemptions) X UStax
back 1yr, Fwd 10yrs
General Bus credit
low income housing
work opportunity credit
welfare to work
etc
back1yr, fwd20
Work Opportunity Credit
for employers who hire ppl of a certain group
40% of first 6k
Child Tax Credit (refundable)
CARES rules apply but <17 and US citizen refundable to extent of lesser of excess credit over tax liab OR earned income -3k X15%
phase out- reduce 50 for each 1k over MAGI10kMFJ 75k single 55k MFS
Earned Income Credit (refundable)
- live in US >1/2 yr
- meet low income thresholds
- not have >spec amt of disqulif income(passive)
- be 25-65 if no kids
- file JT return - spouse cant be dep of another
child not req but they make credit higher
19/24 college rule & ur dependent
credit 7.65 of EarnedIncome -Singlenokids- 457max 34%EI-S1kid-3050 max 40%EI-S2kids-5368 45%EI-S&3kids-5666
WItholding tax credit (refundable if >taxliab)
&Excess FICA…
2 or more employers - credit agains income
one employer - empyer refunds excess
Small Bus Health care credit
up to 35% prems
back 1yr fwd20
35
at least 15-> 9%
Health care coverage credit
for ppl who pay their own insurance
80% premis paid for you and ur family
AMT Formula
REg tax income \+/- Adjustments \+Preferences AMTI (exemption) AMTbase Xtax computation (26 or 28% (below or above175k) TEntative min tax (reg inc tax) AMT
Adjustments (AMT)
PANICTIMME PAL(passive losses) Acc Depr(post 86) NOL of person Installment income of dealer COntracts - %compl vs completion Tax deducs - add back Int deducs- on some home equity loans Medical (10%AGI not 7.5) Misc deducs not allowed (2% agi deducs) exemptions (personal) std deduc add back
+preferences (AMT)
PPP
*Private activity Bond int income
*comple - excess over adj basis
Pre87 Acc depr - excess over stline
*Permanent diffs
AMT credit
carry fwd FOREVER
unles it arose bc of permanent diffs
AMT Credits
FACCE Foreign tax credit Adoption credit Child tax credit Conts to Retm Plans Earned Income credit
Statute of limitations GENERAL
3 yrs after later of
due date
file date
Statute of limitations 25% understatement of Gi
6 yrs after later
due date
file date
Fraud Statute of limitations
fraud will haunt u forever
Refunds Statute of limitations
Bad debts, wthless Secs Statute of limitations
LATER OF
3 yrs after file date or due date
2 yrs after paid tax
7 yrs after due date or file date
estimated tax withholdings formula
LESSER of
90%current year tax
100% last year tax (110% if AGI,150k)
investment interest expense deduction
Lesser of
net inv income (inv income - stuff NOT ints)
Int exp
