SU - 5 Deductions from AGI, Credit, AMT, and Limitations Flashcards
Tax brackets
%’s: 10, 15, 25, 28, 33, 35, 39.6
Taxable income
= AGI - Itemized deduction/standard deduction - personal exemptions
Standard deduction amount
MFJ - 12,600 + 1250 if Age 65/blind
HOH - 9,300 + 1550 if Age 65/blind
Single/MFS - 6300 + 1550 (single) or 1250 (MFS)
If 65 and blind then you get double the additional amount.
Standard deduction for dependents
Greater of:
1050 or
Earned income plus 350
-Earned income does not include dividends or CG
Itemized deductions
Medical and dental, taxes paid, interest paid, charitable contributions, casualty and theft losses, other miscellaneous deductions, job expenses.
Medical/Dental expenses
Must exceed 10% of AGI or 7.5% for 65 y.o. plus.
The medical mileage rate is .19
Taxes paid
Real estate, state withholding, PPT, foreign taxes(unless foreign tax credit is claimed)
Interest paid
-Mortgage on residence (up to $1,000,000) and $100,000 of home equity insurance.
Up to 2 residences
-investment interest expense (only to the extent of net investment income)
-NO personal interest (Ex: CC interest)
Charitable contributions
-to qualified organizations.
Excess carried forward 5 years
-Subject to 50% of AGI maximum, certain contributions might be limited to 30 or 20%. 30% is for to all qualified charitable that is not 50% and to CG property
Casualty and theft losses
Lesser of: decline in FMV or the AB minus insurance reimbursements
- Limit is a $100 floor that is taken off.
- Only aggregated amounts of losses over 10% of AGI
Other Miscellaneous not subject to 2% AGI
Amortizable premium on taxable bonds, Casualty and theft losses from income- producing property, Federal estate tax on income in respect of decedent, gambling losses equal to or less than gambling winnings, impairment related work expenses for people with disabilities, etc
Other Miscellaneous subject to 2% AGI
Unreimbursed employee expenses, tax preparation fees, other expenses
Mileage rate for employees
.54/mile
Education expenses for employees
deductible only if incurred to maintain or improve skills that are required in the TP current employment
The “other expenses” subject to 2% of AGI
Investment expenses ( safe deposit , custodial fees to IRA), Legal fee to collect alimony, hobby expenses
Hobby
An activity for which profit is not a primary motive, which can generate income, but might not. Hobby expenses are deductible to hobby income.
Itemized deduction limitation
AGI's that exceed: 311,300 - MFJ 285, 350 - HOH 155,600 - MFS 259, 400 - Single
are reduced by the lesser:
of 80% of otherwise allowable itemized deductions - or-
3% of the amount AGI exceeds the threshold.
(The overall limit does not apply to Medical, investment interest, casualty losses, gambling losses)
Nonrefundable tax credit
once the tax liability reaches 0 no more credits can produce refunds.
-Foreign tax, child and dependent care, lifetime learning, retirement savings contribution, child tax, credit for elderly or disabled, general business, adoption
Foreign tax credit (FTC)
= US income tax X ( Foreign Source TI/Worldwide TI)
Child and dependent care credit
1 child limit of $3,000. 2 or more is $6,000
credit - 35% of child and dependent care expenses
reduced by 1% (but not below 20%) for each $2,000 where AGI > 15,000. So 43,000 of AGI will only get a 20% credit.
Life time learning credit
20% of qualified tuition expenses paid. The max is $2,000 and is limited to 20% of the first $10,000 of expenses.
Limits with phaseout:
Single - AGI between 55,000 and 65,000
Joint - AGI between 111,000 and 131,000
Is available for years that the AOC is not tax.
Retirement savings contribution credit
Max credit is 50% of $2,000 so ($1000)
AGI limit of 30,750- single
61,500 - MFJ
46,125 - HOH
Child tax credit
1,000 per child
Must be a qualifying child.
credit reduced by $50 for each $1,000 of AGI over threshold Phaseout: Single: 75,000 MFJ: 110,000 MFS: 55,000
Elderly or Disabled Credit
Eligible if 65 y.o. before the close of the tax year or retired because of permanent disability
=15% * base amount
Base amounts: single - 5,000, MFJ ( both 65) - 7500, MFS - 3750
Initial base amount is reduced by: tax-exempt SS benefits, Pension excluded from GI, Disability if under 65, 1/2 of excess of AGI over (single -7500, MFJ-10,000, MFS-5000)
