REG 2 Flashcards
For casualties:
First take off 100 dollars for each casualty loss, then take off 10% of AGI for all the casualty losses together, but FMV of loss is limited to the basis of the property
lifetime learning credit, retirement savings contribution credit, elderly disabled credit:
Cannot result in refund, but ctc can
For investment interest expense:
The deduction is limited to
taxable investment income, just like gambling
Charity:
Cash is subject to 60%, Ordinary Income Property is 50%, LTCG is 30%
For estimated tax payments:
90% of current year tax or 100% of prior year. But if you make 150k in prior year, then 110% of tax of prior year
An employee who has had Social Security tax withheld in an amount greater than the maximum for a particular year may claim the excess as a credit against income tax:
If that excess resulted from correct withholding by two or more employers.
Gambling losses are:
Deductible as a miscellaneous itemized deduction (from AGI) limited to gambling winnings. Same for Investment Interest Expense
If CPA willfully understates return, penalty is:
75% of fee or 5,000, whichever is greater
Foreign taxes can be used either:
As a credit to federal income tax, or as an itemized deduction
Social Security benefits:
If poor(less than 25k) not taxable. If more than 60k then 85% is taxable. Calculate AGI + Interest + 50% of SS received
Interest for mortgages or home improvements:
Is deductible
Auto loan interest:
Not deductible
Medical Expenses:
Only 7.5 of AGI and up are deductible
Penalties on not pre-paying tax is only:
If tax is 1,000 after withholdings
For SEP IRA:
First deduct 50% of SE Taxes, then take 20% of that, as long as this final number is below 50k
Child care credit:
Ranges from 20 to 35 % of AGI, max of 3k per dependent
For IRA:
Up to 2000 max. As long as taxpayer is 18 by end if year
Life Insurance:
Not taxable unless transferred. Then take proceeds - contributions
For Capital Assets:
LT is over year. ST is ordinary income, LT is 0,15,or 20. Loss can be carried forward forever - up to 3k per year. For Corp it’s go back 3 and forward 5.
For NOL:
Can be carried forward indefinitely - up to 80% of taxable income
For annuities:
Depends if bought with pre-tax (then proceeds are fully taxable) or post tax dollars - then use Exclusion ratio -divide the Investment by the Expected return and multiply that ratio by this years’ proceeds
Partnership’s deduction is lesser of:
Basis at end of year or amount at risk
Cosmetic surgeries are deductible if:
It’s to correct a mistake from previous cosmetic surgery - even if that one was non-deductible
For ESPP:
Option must be Exercised within 27 months of Grant Date.
