R2 INDV TAX - Adj, Ded, Credits 2 (M)

Question 1

Deductible Medical Expenses Formula

Answer 1

Qualified Medical Expenses 
(Insurance Reimbursement)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Qualified Medical Expense Paid
(10% AGI)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Deductible Medical Expenses

Question 2

Deductible Medical Expenses

Answer 2

Medicine and drugs
Doctors
Medical and accident insurance
Required surgery
Transportation to medical facility
Physically handicapped costs

Question 3

Nondeductible Medical Expenses

Answer 3

Elective surgery, elective cosmetic operations, drugs that are against the law, travel, vitamins
Life insurance
Capital expenditures
Health club memberships
Personal hygiene

Question 4

Keogh (Profit Sharing) Plans

Answer 4

Set up by a self-employed taxpayer subject to the self-employment tax
Lesser of $52,000 and 25% net (Keogh/self-employed) earnings

Question 5

Keogh Net Earnings Formula

Answer 5

Business Income
(Business Expense)
 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Net Business Income
(1/2 SE Tax)
(Keogh Deduction)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Keogh Net Earnings

Question 6

Charitable Contributions Not Fully Deductible

Answer 6

Charitable contributions subject to the 50% limit that are not fully deductible in the year made may be carried forward five years

Question 7

Ad Valorem

Answer 7

A tax based on the value of real estate or personal property. They are allowable itemized deductions

Question 8

Additional Standard Deduction for the Elderly and Blind

Answer 8

A taxpayer who uses the standard deduction and is elderly and/or blind is entitled to an increased standard deduction

Question 9

Activities Not Engaged in For Profit

Answer 9

No deduction attributable to an activity not engaged in for profit is allowed

Question 10

Personal Tax Credits

Answer 10

May reduce personal tax liability to zero, but they may not result in a cash refund

Question 11

Refundable Credits

Answer 11

Subtracted from income tax liability and may result in a cash refund when the credit exceeds tax liability owed even if no tax is withheld from wages

Question 12

Child and Dependent Care Credit

Answer 12

A tax credit of 20 percent to 35 percent of eligible expenditures

Question 13

Eligible People under Child and Dependent Care Credit

Answer 13

A qualifying child, under age 13
Any disabled dependent
A spouse who is disabled

Question 14

Eligible Expenses under the Child and Dependent Care Credit

Answer 14

Babysitter
Nursery School
Day Care

Question 15

Credit for the Elderly and/or Permanently Disabled

Answer 15

This credit of 15% of eligible income is available to individuals who are 65 years of age or older; or under 65 and retired due to permanent disability

Question 16

Credit for the Elderly and/or Permanently Disabled Formula

Answer 16

Gross given (5K Single 7,500 MFJ)
(Social Security)
(1/2 Excess AGI over 7,500 Single 10K MFJ)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Balance
x 15%
\_\_\_\_\_\_\_\_\_
Credit