REG M4 Adjustments Flashcards
What is not included in earned income when calculating IRA contributions limitations
-Interest and dividends
-Annuity income
-Pensions
-Alimony
What is the special rule for a taxpayer who has an IRA and participates in an ESRP
When 1 spouse participates in the ESRP but the other does not.
Spouses not participating will have different numbers for the AGI phaseout and range.
HSA distribution form
Form 8889
What is the maximum deduction for educator expenses
$300
$600 if MFJ and both spouses are qualified educators
How is a trad IRA taxed
Contributions = not taxed
Distributions = Fully taxable
What is the maximum amount each taxpayer con contributes to an IRA when married
under 50 7,000 each for 2024
over 50 8,000 each for 2024
What can drug dealers deduct
Only COGS (Business)
Can illegal businesses deduct their operating exps
Yes (Business)
List of above the line deductions
-Educator expenses
-Trad IRA contributions
-Student Loan Interest
-HSA contributions
-Moving exp (only armed forces)
-1/2 of SE tax
-Contributions to certain self-employed retirement plan
-Penalty on early withdrawlal of savings
-Alimony paid B4 2019
-Attounry fees in certain discrimantory cases
IS self-employed health insurance deductible
The premiums paid are deductible for taxpayer, spouse and dependents
2024 Max contributions to an IRA for a single taxpayer
Under 50 lesser of 7,000 or earned income
Over 50 lesser of 8,000 or earned income
Where do AGI deductions appear on the tax form
Schedule 1 page 2
Is student loan interest deductible
Yes
Is a penalty on the early withdrawal of saving tax deductible
Yes
What is a High Deductible Health Plan
-Health plan with a minimum deductible, a maximum annual deductible and out-of-pocket limitation exp
Rules for deducting alimony
If the alimony agreement is B4 2019, the payee can deduct alimony payments
Math to find deductible limitation to an IRA for a taxpayer who also participates in an ESRP
START: taxpayers AGI
LESS: Phaseout threshold
=Excess over phaseout range
DIVIDE: Phaseout Range
= Phaseout %
MULTIPLY BY: Contribution amount
= Amount that CAN’T be deducted
Are self-employed retirement plan contributions deductible
yes
What is the importance of AGI
Serves as a basis for computing % limitations on certain itemized deductions
Math to find the max amount that can be contributed to a Roth IRA (phaseout)
START: taxpayers MAGI
LESS: Phaseout threshold
=Excess over phaseout range
DIVIDE: Phaseout Range
= Phaseout %
MULTIPLY BY: Max allowed contribution
= Amount that CAN’T be contributed to the Roth IRA
How much can you deduct of student loan interest in a year?
2,500
Items considered a qualified education exp
books, supplies, computers, equipment and other materials used in the class
Is political contributions and lobbying deductible
No
Paying money to monitor legislative activity is deductible
Is self-employment tax deductible? If so what %?
Yes 50%
Who is eligible for an HSA
-Under 65
-Self-employed
-employee of an employer who has a High Deductible Health Plan
HDHP qualification amounts for single and family plans
Single
1,600 annual deductibles
Out of pocket limit 8,050
Family
3,200 annual deductibles*
16,100 out of pocket limit
How are the contributions and distributions from an HSA taxed
Personal contributions are deductible
Distributions are nontaxable as long as they are used to pay for qualified medical expenses
Max contributions to a HSA
Single = 4,150
Family = 8,300
If employer contributes the amount is nondeductible but isn’t included in gross income
Can illegal payments be deducted (Bribe)
NO
2024 Max contributions to an IRA for a married taxpayer
Under 50 lesser of 14,000 or earned income
over 50 lesser of 16,000 or earned income
2024 deductible limitation and phaseout to an IRA for taxpayers who also participate in an employer-sponsored retirement plan
For AGI
Single = 77k-87k Range = 10k
MFJ = 123k - 143k Range = 20k
MFS = 0-10k Range = 10k
Are contributions made to a Roth IRA deductible
NO
Who can deduct moving expenses
Only active members of the armed forces under direct orders to move
What is the phaseout for student loan interest deduction
Single = 80k-95k
MFJ = 160k-195k
When are deductions to an IRA limited
When the taxpayer participates in another type of retirement plan
Such as an employer-sponsored retirement plan
Who is a qualified educator
Teachers, counselors, principals and aides in grades k-12
Is reimbursement for company exps under an accountable plan included in employee’s gross income
NO
Can legal fees be deducted
Yes, but it must be related to the business
How are contributions to a deductible traditional IRA deducted
Deducted to get to AGI
Allowed for the year you made the contribution any time before April 15th
Deductible vs out of pocket limitation
Deductible = Amount you pay B4 your health insurance kicks in
Out-of-pocket limitation = Max amount you have to pay in a year B4 insurance will cover ALL of your medical expenses
Types of SE retirement plans
SEP IRA
SIMPLE IRA
SEP IRA maximum contributions
Lesser of…
20% of SE net income reduced by 1/2 SE tax
or
69,000
76,500 age 50 or older
SIMPLE IRA maximum contributions
Lesser of…
100% SE net income reduced by 1/2 SE tax
or
15,500
19,000 age 50 or older
