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REG M2 Gross Income Pt 2 > REG M4 Adjustments > Flashcards

REG M4 Adjustments Flashcards

1
Q

What is not included in earned income when calculating IRA contributions limitations

A

-Interest and dividends
-Annuity income
-Pensions
-Alimony

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2
Q

What is the special rule for a taxpayer who has an IRA and participates in an ESRP

A

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.

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3
Q

HSA distribution form

A

Form 8889

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4
Q

What is the maximum deduction for educator expenses

A

$300

$600 if MFJ and both spouses are qualified educators

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5
Q

How is a trad IRA taxed

A

Contributions = not taxed

Distributions = Fully taxable

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6
Q

What is the maximum amount each taxpayer con contributes to an IRA when married

A

under 50 7,000 each for 2024

over 50 8,000 each for 2024

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7
Q

What can drug dealers deduct

A

Only COGS (Business)

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8
Q

Can illegal businesses deduct their operating exps

A

Yes (Business)

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9
Q

List of above the line deductions

A

-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

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10
Q

IS self-employed health insurance deductible

A

The premiums paid are deductible for taxpayer, spouse and dependents

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11
Q

2024 Max contributions to an IRA for a single taxpayer

A

Under 50 lesser of 7,000 or earned income

Over 50 lesser of 8,000 or earned income

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12
Q

Where do AGI deductions appear on the tax form

A

Schedule 1 page 2

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13
Q

Is student loan interest deductible

A

Yes

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14
Q

Is a penalty on the early withdrawal of saving tax deductible

A

Yes

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15
Q

What is a High Deductible Health Plan

A

-Health plan with a minimum deductible, a maximum annual deductible and out-of-pocket limitation exp

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16
Q

Rules for deducting alimony

A

If the alimony agreement is B4 2019, the payee can deduct alimony payments

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17
Q

Math to find deductible limitation to an IRA for a taxpayer who also participates in an ESRP

A

START: taxpayers AGI
LESS: Phaseout threshold

=Excess over phaseout range

DIVIDE: Phaseout Range

= Phaseout %

MULTIPLY BY: Contribution amount

= Amount that CAN’T be deducted

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18
Q

Are self-employed retirement plan contributions deductible

A

yes

19
Q

What is the importance of AGI

A

Serves as a basis for computing % limitations on certain itemized deductions

20
Q

Math to find the max amount that can be contributed to a Roth IRA (phaseout)

A

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

21
Q

How much can you deduct of student loan interest in a year?

A

2,500

22
Q

Items considered a qualified education exp

A

books, supplies, computers, equipment and other materials used in the class

23
Q

Is political contributions and lobbying deductible

A

No

Paying money to monitor legislative activity is deductible

24
Q

Is self-employment tax deductible? If so what %?

A

Yes 50%

25
Q

Who is eligible for an HSA

A

-Under 65
-Self-employed
-employee of an employer who has a High Deductible Health Plan

26
Q

HDHP qualification amounts for single and family plans

A

Single

1,600 annual deductibles
Out of pocket limit 8,050

Family

3,200 annual deductibles*
16,100 out of pocket limit

27
Q

How are the contributions and distributions from an HSA taxed

A

Personal contributions are deductible

Distributions are nontaxable as long as they are used to pay for qualified medical expenses

28
Q

Max contributions to a HSA

A

Single = 4,150

Family = 8,300

If employer contributes the amount is nondeductible but isn’t included in gross income

29
Q

Can illegal payments be deducted (Bribe)

A

NO

30
Q

2024 Max contributions to an IRA for a married taxpayer

A

Under 50 lesser of 14,000 or earned income

over 50 lesser of 16,000 or earned income

31
Q

2024 deductible limitation and phaseout to an IRA for taxpayers who also participate in an employer-sponsored retirement plan

A

For AGI

Single = 77k-87k Range = 10k

MFJ = 123k - 143k Range = 20k

MFS = 0-10k Range = 10k

32
Q

Are contributions made to a Roth IRA deductible

A

NO

33
Q

Who can deduct moving expenses

A

Only active members of the armed forces under direct orders to move

34
Q

What is the phaseout for student loan interest deduction

A

Single = 80k-95k

MFJ = 160k-195k

35
Q

When are deductions to an IRA limited

A

When the taxpayer participates in another type of retirement plan

Such as an employer-sponsored retirement plan

36
Q

Who is a qualified educator

A

Teachers, counselors, principals and aides in grades k-12

37
Q

Is reimbursement for company exps under an accountable plan included in employee’s gross income

A

NO

38
Q

Can legal fees be deducted

A

Yes, but it must be related to the business

39
Q

How are contributions to a deductible traditional IRA deducted

A

Deducted to get to AGI

Allowed for the year you made the contribution any time before April 15th

40
Q

Deductible vs out of pocket limitation

A

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

41
Q

Types of SE retirement plans

A

SEP IRA

SIMPLE IRA

42
Q

SEP IRA maximum contributions

A

Lesser of…

20% of SE net income reduced by 1/2 SE tax

or

69,000
76,500 age 50 or older

43
Q

SIMPLE IRA maximum contributions

A

Lesser of…

100% SE net income reduced by 1/2 SE tax

or

15,500
19,000 age 50 or older

REG M2 Gross Income Pt 2 (2 decks)

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