REG 1 Flashcards
Which individuals must file income tax returns even if their income is lower than the
“general rule” requirement?
Net earnings from self-employment > $400
Other’s dependants with gross income> $1000
Individuals who receive advance payments of earned income credit must file
Individual Extension?
Although granted
automatically, the six-month extension must be requested by the taxpayer by filing
Form 4868 by April 15th.
Out of country- 2 month, no file needed
Qualifying Widow(er) (Surviving Spouse) reqirements?
With dependent child-maintain household for the whole year
2 years after death year
not remarried
Head of household reqirements?
not non-resident alien
maintains household 1/2 year for dependent ( children, parents- may not live together, relatives)
personal exemption phse-out?
Starts at $254200-single
$305050-joint
reduce 2% for every $2500 excess
Requirements for claiming dependency exemptions under CARES rule-child?
close relative,
age limit,
residency and filling requirements-live together 50% and no joint return,
eliminate gross income test, support test- child paid < 50%
Requirements for claiming dependency exemptions under SUPORT rule- relative?
Support- supplied > 50% support (10% for multiple)
Under exemption amout ($3950)- taxable income
Preclude joint return filers
Only citizen( us mexico canada)
Relative
or Taxpayer live together with whole year
Is employer paid life insurance premium taxable to employee?
Premiums > $50,000 coverage are partially taxable
are employer paid educational expense excludable?
yes. up to $5250/ year towards degree
When will you lose unused FSA money?
usually 2.5 month after year-end
Series EE bond interest taxable?
Tax-exempt when used for higher education; phase-out starts when MAGI>76,000 or 113,950
What’s MAGI?
Modified AGI is a
taxpayer’s AGI adjusted for certain foreign income exclusions. (add back)
Unearned income of child < 18 tax rate?
First $1000 - exempt
Next $1000- child’s rate
Rest- parent’s rate
Treatment of forfeited interest?
Adjustment above AGI
Dividend income taxability?
from E&P (current or accumulated)- taxable
return of capital- none taxable
No E&P or Basis- Capital gain
Stock split, stock dividend- non taxable
Is dividend income capital gain?
NO. But same tax rate, if held for more than 60 days during the 120-day period
that begins 60 days before the ex-dividend date
1040 Schedule A, B, C, D,E,F
Itemized deduction interest and dividend business, self employment capital gain/loss supplemental income/loss- rental, K-1s farming
Nondeductible Schedule C expenses?
salary for self
fed income tax
personal portion of …bla bla
Health insurance- 100% adjustment to arrive at AGi
Is state business income tax deductible on schedule c?
Yes. But personal portion is not–go to schedule A.
Self employment tax rates?
12.4% FICA(ss)+2.9% medicare, but 50% is adjustment above AGI-(employer potion)
Is NOL on schedule C deductable againtst other sources of income?
Yes. plus 2/20 carryover.
What costs are required to be capitalized?
taxes paid in connection with acquisition of property.
capitalized as inventory- direct materials, direct labor, applicable indirect costs (overhead, utilities, etc.)
Only apply to manufatures and big resalers.
What costs are not required to be capitalized?
selling, general, administrative, R&D
inventory acquired for resale- if gross receipts < 10M for 3 years
Who is NOT required to use percentage-of-comletion method for long contracts income recognition?
small contractors(less than 10M reciepts)，Home construction contractors, land(90%) constructions,
services-architects, enginees, software implementation
services under warranty
Who’s not required to maintain inventory(accrual)?
Sole propriatary farmers- expense inventory. schedule F
Can sole propriatory business use cash basis for inventory?
NO
IRA age limit for withdraw? and penalty?
59.5. 10%
Exception to IRA early withdraw penalty tax?
HIMDEAD Home buyer (1st time)-10,000 Insurance-medical Medical expense > 10% AGI Disability Education And Death.
Who send out K-1s?
S corp
Partnerships LLCs
Estates
Trusts
When is rental income recognized?
Income- received if nonrefundable
How is rental of vacation home taxed? deduct expense?
Less than 15 days- no tax
more than 15 days, but personal used >14 day and > 10% of rental days– recognize income, prorate expense( to the extent of income, no net loss except mom and pop rule-$25,000)
Is net passive loss carried over?
Yes. Rolls with land forever/sold
Can passive activity loss be deducted againt other income?
NO, but Mom and Pop $25,000 exception- phased out starts 100,000-reduced by 50% excess AGI
Is SS income taxable?
income34,000-85% taxable
Is unemployment comp taxable?
Yes
Is worker’s comp taxable?
NO
Is mdicare taxable?
NO
Is accident insurance proceeds taxable?
Paid by individual- NO
Paid by employer- Yes, unless for medical expense.
Is foreign-earned income taxable?
NO if passed physical presence test-330 days/ 12 month
When is employee option taxed?
Non-qualified: When value can be determined. At grant or at exercise.
Qualified: ISO and ESPP- not taxable as compensation, may have capital gain/loss when sold.
