R2 Individual Taxation: Part 2

Question 1

What are the refundable credits?

Answer 1

1. AOTC
2. CTC
3. EIC

Question 2

What is the minimum payment required to avoid underpayment penalties?

Answer 2

90% of current tax/100% of prior year tax if AGI<150K

90% of current tax/110% of prior year tax if AGI>150K

Question 3

What income do you include in your return when you exercise a Nonqualifying ESOP?

Answer 3

Stock received @ FMV - Costs incurred in stock

Question 4

How is a non-qualified ESOP taxed to the employee when FMV is available?

Answer 4

FMV of stock on the date granted is recognized as ordinary income. No taxation at the date of exercise.

Question 5

What is the basis of a non-qualified ESOP when FMV is available

Answer 5

Basis = Exercise Price + PTI on date of grant.

Question 6

How is a non-qualified ESOP taxed to the employee when FMV is not available?

Answer 6

FMV of stock on the date exercised minus stock option price exercised is recognized as ordinary income on the date exercised. No taxation at the date granted.

Question 7

What is the basis of a non-qualified ESOP when FMV is not available

Answer 7

Basis = FMV of stock on the date exercised.

Question 8

What are the two types of qualified ESOP?

Answer 8

1. ISO = Not taxed, and Basis = Ex Price + Amt Paid

2. ESPP = Not taxed, and Basis = Ex Price + Amt Paid

Question 9

What are the non-deductible taxes for Itemized Deduction purposes?

Answer 9

1. Federal Taxes.
2. Inheritance Taxes.
3. Business or Rental Taxes

Question 10

What portion of the CTC is refundable?

Answer 10

For 2021, fully refundable. CTC is $2,000 per child.
TPs can get an additional $1,000 for children ages 6-17 and $1,600 for children under 6, depending on AGI. If AGI is >$150K, then PHO at $300K. PHIN is $50 reduction per $1,000 over $150K.

Old rule!
Lesser of: 
1. Tax Liab - CTC
2. (Earned income - 2,500) * 15%
3. 1,400/child
Note: don't get confused here! Remember it's either or!

Question 11

What are the Child and Dependent Care requirements?

Answer 11

A. Determine if dependent qualifies.

B. Determine if TPs produce income.

Question 12

What is the Child and Dependent Care calculation?

Answer 12

Qualifying amount * applicable %

Question 13

What is the qualifying amount of the Child and Dependent Care?

Answer 13

Lesser of:

1. Lowest earned income.
2. Actual expenses.
3. 8K per dependent (max of 16K)

Question 14

What is the applicable % of the Child and Dependent Care?

Answer 14

1. Max 50% of 8K per dependent (max of 8K)
2. PHO 50% to 20% for AGI > 125K but not below 20%.
3. PHO 20% to 0% for AGI > $400K