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Regulation > SU # 5 - Deductions from AGI, Credits, AMT & Limitations > Flashcards

SU # 5 - Deductions from AGI, Credits, AMT & Limitations Flashcards

1
Q

5.2 - Job Expenses & Misc Deductions

Itemized Deduction Limitation:

What is the reduction for high income tax payers that must reduced aggregate amount of itemized deductions?

A

Lesser of 80% of allowable itemized eductions or 3% of amount by which AGI exceeds threshold

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2
Q

5.2 - Job Expenses & Misc Deductions

Itemized Deduction Limitation:

By what amount must AGI exceed before the itemized deduction is reduced for MFJ filers?

A

$311,300

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3
Q

5.2 - Job Expenses & Misc Deductions

Itemized Deduction Limitation:

By what amount must AGI exceed before the itemized deduction is reduced for HOH filers?

A

$285,350

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4
Q

5.2 - Job Expenses & Misc Deductions

Itemized Deduction Limitation:

By what amount must AGI exceed before the itemized deduction is reduced for Single filers?

A

$ 259,400

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5
Q

5.2 - Job Expenses & Misc Deductions

Itemized Deduction Limitation:

By what amount must AGI exceed before the itemized deduction is reduced for MFS filers?

A

$ 155,650

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6
Q

5.2 - Job Expenses & Misc Deductions

Business Expenses:

When are reimbursed business expenses excluded from income?

A

When they are substantiated — deductions subject to 2% of AGI are allowed for unsubstantiated reimbursed business expenses

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7
Q

5.3 - Tax Credits

Elderly or Disabled Credit:

How is the elderly or disabled credit calculated?

A

15% of the reduced initial base amount

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8
Q

5.3 - Tax Credits

Elderly or Disabled Credit:

Identify the items that reduce the initial base amount

A
  • tax exempt SS benefits
  • excluded pension or annuity benefits
  • disability income if less than 65 years old
  • 1/2 the excess of AGI over
    • $ 7,500 Single
    • $ 10,000 MFJ
    • $ 5,000 MFS
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9
Q

5.3 - Tax Credits

Elderly or Disabled Credit:

What is the initial base amount for filers who are Single, MFJ (both 65+) and MFS?

A
  • $5,000 Single
  • $7,500 MFJ (both 65+)
  • $3,750 MFS
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10
Q

5.3 - Tax Credits

Lifetime Learning Credit:

What is the AGI phaseout for the Lifetime Learning Credit?

A
  • $55,000 - $65,000 Single
  • $110,000 - $130,000 MFJ
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11
Q

5.3 - Tax Credits

Lifetime Learning Credit:

Calculate the Lifetime Learning credit for single filers of the AGI phaseout

A

Amount of credit allowed * (($ 65,000 - MAGI) / $10,000)

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12
Q

5.3 - Tax Credits

Lifetime Learning Credit:

Calculate the Lifetime Learning credit for MFJ filers in the AGI phaseout

A

Amount of credit allowed * (( $ 130,000 - MAGI) / $ 20,000)

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13
Q

5.3 - Tax Credits

Work Opportunity Tax Credit:

What is the amount of the WOTC (work opportunity tax credit)?

A
  • 40% of the 1st $ 6,000 of wages paid to a qualified employee in his/her 1st year of service
  • $10,000 for Long Term Family Assistance Recipients
  • $3,000 for Qualified Summer Youth Employees
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14
Q

5.3 - Tax Credits

Work Opportunity Tax Credit:

What are the employee requirements to be eligible for the Work Opportunity Tax Credit?

A
  • work at least 400 hours
    • Reduced to 25% for employment of 120+ hours but less than 400 hours
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15
Q

5.3 - Tax Credits

Work Opportunity Tax Credit:

Identify the “max credits” for the WOTC?

A
  • $2,400 certain targeted groups
    • ($6,000 * 40%)
  • $4,000 LT Family Assistance Recipients
    • $ ,10($10,000 * 40%)
  • $1,200 Qualified Summer Youth Employees
    • ($3,000 * 40%)
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16
Q

5.3 - Tax Credits

Work Opportunity Tax Credit:

What is the 2nd year credit for LT Family Assistance Recipients?

A
  • $5,000 — 50% of 1st $10,000
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17
Q

5.3 - Tax Credits

Work Opportunity Tax Credit:

What is the max credit for both years in the aggregate for LT Family Assistance Recipients?

A
  • $9,000 max credit for both years in the aggregate
    • ($4,000 first year + $5,000 second year)
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18
Q

5.3 - Tax Credits

Work Opportunity Tax Credit:

Idenitfied qualified wages for the WOTC?

A
  • Remuneration for employment
  • Funds received from accident & health plans
  • Employer contributions to accident & health plans
  • Educational assistance
  • Dependent care expenses
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19
Q

5.3 - Tax Credits

Earned Income Credit:

What are the 3 Earned Income Credit qualifications for an individual who does not have a qualifying child?

A
  • U.S. principal residence
    • Greater than ½ the tax year
  • At least age 25 and not over 64 years’ old
  • Not a dependent of another person
20
Q

5.3 - Tax Credits

Earned Income Credit:

Identify the 7 qualifications for the Earned Income Credit

A
  • Valid SS#
  • Earned income from employment
  • Not use MFS status
  • Be a U.S. citizen or resident alien
  • Must not be a qualifying child of another person
  • AGI & earned income less than statutory thresholds
  • Investment income below annual threshold of $3,400 for 2016
21
Q

5.3 - Tax Credits

Adoption Credit:

What is the max credit for the Adoption Credit?

A

$ 13,460

22
Q

5.3 - Tax Credits

Adoption Credit:

What is the phaseout for the adoption credit?

A
  • MAGI greater than $201,920
23
Q

5.3 - Tax Credits

Adoption Credit:

At what income level is the adoption credit completely phasedout or unavailable?

A
  • Not available if MAGI = or greater than $241,920
24
Q

5.3 - Tax Credits

Adoption Credit:

Is the unused adoption credit carried forward? If so, what is the statute of limitations?

A

Yes - carried forward for up to 5 years >> not subject to MAGI phaseout

25
Q

5.3 - Tax Credits

American Opportunity Credit:

What is the computation for the American Opportunity Credit?

A
  • 100% first $2,000 expenses +
  • 25% second $2,000 expenses
26
Q

5.3 - Tax Credits

American Opportunity Credit:

What is the AGI phaseout for the American Opportunity Credit?

A
  • AGI Phaseout:
    • $80,000 - $90,000 all other filers
    • $160,000 - $180,000 MFJ
27
Q

5.3 - Tax Credits

American Opportunity Credit:

What is the AGI phaseout calculation for the American Opportunity Credit?

A

Amount of credit allowed * ((AGI - $ 80,000 or $ 160,000 MFJ) / $ 10,000 or $ 20,000 MFJ)

28
Q

5.3 - Tax Credits

Child / Dependent Care Credit:

How much is the child & depdendent care credit?

A

35% of expenses limited to $ 3,000 for one child and $ 6,000 for 2 or more children

29
Q

5.3 - Tax Credits

Child / Dependent Care Credit:

What is the credit available to taxpayers with AGI over $43,000?

A

20% credit

30
Q

5.3 - Tax Credits

Child / Dependent Care Credit:

What is the reduction for the child / dependent care credit?

A
  • Reduced by 1% but not below 20% for each $2,000 by which AGI exceeds $15,000
31
Q

5.3 - Tax Credits

Child / Dependent Care Credit:

Calculate the % reduction for the child / dependent care credit

A

excess AGI / 2,000 = % reduction

32
Q

5.3 - Tax Credits

Child Tax Credit:

How much is the child tax credit?

A

$ 1,000 per qualifying child

33
Q

5.3 - Tax Credits

Child Tax Credit:

What is the AGI phaseout for the child tax credit?

A
  • $110,000 MFJ
  • $55,000 MFS
  • $75,000 Single, HOH
34
Q

5.3 - Tax Credits

Child Tax Credit:

What is the credit reduction for the child tax credit?

A
  • Credit reduced by $50 for each $1,000 MAGI above thresholds
35
Q

AMT Preference Items:

Identify the most common tax preference items for AMT purposes

A
  • Tax exempt interest on private activity bonds
    • Issued after 1986 but not 2009 & 2010
  • Excess depletion
  • Drilling costs
  • Small business stock exclusion
    • Purchased prior to 9/28/2010 or after 12/31/2015
    • 7% of excluded gains would be added back to AMTI
  • Intangibles
36
Q

AMTI Formula:

What is the formula to calculate AMTI?

A

Taxable income

+ Tax preferences

+ Personal exemptions

+ STD deduction if not itemizing

+ / - Certain other adjustments

= Alternative Minimum Taxable Income

37
Q

AMT Adjustments:

Identify the itemized deductions that are denied for AMT adjustments (must be added back to taxable income for AMTI)

A
  • Miscellaneous itemized deductions
  • State, local and foreign income taxes
  • Real and personal property taxes
  • Other adjustments not allowed
    • STD deduction
    • Personal exemption
38
Q

AMT Formula:

Calculate AMT base

A

Alternative Minimum Taxable Income (AMTI)

  • Exemption Amount

= AMT Base

39
Q

AMT Formula:

Calculate tentative minimum tax (TMT)

A

AMT base

* AMT rate

= TMT

40
Q

AMT Formula:

Calculate AMT

A

TMT

  • Regular Income Tax

= AMT

41
Q

AMT Formula:

Identify the AMT tax rate and the associated income limit for that rate

A

26% for the 1st $ 185,400 MFJ or $ 92,700 MFS

42
Q

AMT Formula:

Identify the AMT tax rate for excess income and the associated income limit for that rate

A

28% rate for all income over $ 185,400 MFJ or $ 92,700 MFS

43
Q

AMT Formula:

Identify the exemption amount & phaseout in calculating AMT tax base for MFJ filing status

A
  • $ 83,800
  • 25% phaseout for excess over $ 159,700
44
Q

AMT Formula:

Identify the exemption amount & phaseout in calculating AMT tax base for MFS filing status

A
  • $ 41,900
  • 25% phaseout for excess over $ 79,850
45
Q

AMT Formula:

Identify the exemption amount & phaseout in calculating AMT tax base for Single filing status

A
  • $ 53,900
  • 25% phaseout for excess over $ 119,700
46
Q

5.5 - Losses and Limits

Rental Real Estate Phaseout:

How much of a loss deduction is permitted for active participation in rental real estate?

A

$ 25,000 can offset active income

47
Q

5.5 - Losses and Limits

Rental Real Estate Phaseout:

What is the MAGI phaseout for rental real estate loss deduction?

A
  • 50% loss reduction if MAGI in excess of $100,000
  • Deduction eliminated if MAGI over $150,000

Regulation (67 decks)

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