Tax Flashcards
AOTC
100% of the 1st $2,000 education expenses
+25% of the next $2,000 education expenses
Max: $2,500 per kid
Lifetime Learning Credit
20% of ed expenses up to $10k
Max: $2,000 per family
Child Tax Credit
$2k/kid
Child & Dependent Care Credit
$3k/6k
Grants
Pell and Supplemental Educational Opportunity Grant (SEOG): exceptional need
Scholarships
Are always tax free
Federal Direct / Stafford Loans: Direct Subsidized
Direct Subsidized: Must have financial need. Undergrad only, better terms, govt pays while in school and 1st 6 months and if you defer payment
Direct PLUS
All college+. NO financial need required. You pay all interest
Federal Direct / Stafford Loans: Direct Unsubsidized
All college+, no financial need required. You pay all interest
Expected Family Contribution
Assets (5.64% of parents, 20% of students) + Income (22-47% of parents, 50% of students -$9,410)
Only parent assets excluded are home and retirement
What income is backed out from AGI for EFC calc?
Distributions from Coverdell (student) and Roth IRA
what debt can’t be forgiven if you file Chapter 7?
alimony, child support, taxes < 3 years due, student loans, secured debt
Which risk is qualitative: tolerance or capacity?
Tolerance
Mortgage payments: beg or end?
END
Education Calc Steps 1-3
1: Project FV of 1 year of tuition
2: Calc PV of of that amount:
BEG
pmt=FV from step 1
i=(ROR-INF)/(1+INF)
n=4
3: Calc what they’re asking for (pmt or PV)
BEG or END
i=ROR, n=years to college, FV=step 2 result
Mortage payments: beg or end?
END
FICO Score Calc
Payment history (35%)
Amounts owed (30%)
Length of credit history (15%)
New credit (10%)
Credit mix (10%)
Basis for Gift with Gift Tax Paid Formula
Donor’s Basis +
Gift Tax Paid X (App/(Gift-$18k))
FICO
.800. Exceptional
.740. Very good
.670. Good.
.580. Fair
how much Student loan interest is deductible?
$2,500
2 Mortgage interest deduction
$750k/mortgage amount X intexp
Refundable Tax Credits?
Additional American Earned Premium
(All Americans Eat Pie)
how do you qualify for Head of Household?
Must not be married, pay >50% of housing costs. Qualifying kid>50% of year, Qualifying relative 50%+ living expenses
Estimated tax payment dates
3, 5, 8, 12
what percent of last year and this years tax must you pay to avoid tax penalty?
Lesser of:
$0-150k: 100% LY, 90% TY
$150k +: 110% LY, 90% TY
Tax penalties - Negligence, Fraud, Frivolous?
20%, 75%, $5k
Fail to file, fail to pay
5%, 0.5%
1098
Mortgage interest
1099-R
Retirement distributions
Form 4868
Extension of time to file
Form 5498
IRA contributions
Form 8606
Nondeductible IRAs
FIFO, LIFO inventory when prices higher
FIFO: inventory realistic
LIFO: inventory understated
MACRS years cars/computers
5 years
MACRS machines/equipment
7 years
MACRS resi and CRE
27.5 / 39 years
What’s not a capital asset?
A/R
Copyrights
Inventory
Depreciable property used in biz
Section 1231. Sold over orig cost? 1245 / 1250
Cap gains, dep @ ord income / 25%
Section 1231 sold under cost 1245 / 1250
Ordinary loss for both
Section 1231 Sold between cost and adj cost 1245 / 1250
Ord income rate / 25%.
1231 Like Kind Amount Realized
FV-BV + Boot (cash received + mortgage dumped)
1031 Realized Gain
Amount realized less BV of asset transferred
1231 Recognized Gain
Lesser of (Realized Gain, net boot received)
what qualifies for your property to be “Rental real estate”?
did you use the property for personal use the greater of 14 days or 10% of days rented? if no then it’s a rental.
Rental use property
You use it greater than (14 days, 10% of all days rented). All expenses are allowed.
Mixed use property
You use it less than (14 days, 10% of all days rented). All expenses X (personal use days / total use days)
Cash gifts limit as percent of AGI
60% of AGI / 30% of AGI
Ordinary income gifts (STCG, Art, Inventory)
50% of AGI / 30% of AGI
LTCG using FMV
30% of AGI / 20% of AGI
LTCG using BV
50% of AGI / 30% of AGI
Use related gifts to charity max donation
50% of AGI if BV
30% of AGI if MV
Use unrelated gifts to charity max donation
Lesser of BV or MV
Charity deduction for services
Tolls + (gas and parking or 14c/mile)
Imputed interest income
None on <$10k loan
AFR on > $100k loan
Min (net inv inc or AFR) on loans 10-100k; if NII < $1k, then $0
AMT adjustment at option exercise
(Exercise - Grant) X Shares
Kiddie Tax
0% on $0-1300
10% on $1300-2600
Parents top tax bracket >$2600
Net investment income and NII Tax
On MAGI over $200/250k, 3.8% X lesser of (NII or excess of MAGI over $200/250k)
FACTA: US accounts overseas unmarried or separate
$50k/75k
FACTA: US accounts overseas MFJ
$100/150k
FACTA: Foreign account limits to report last day / any day
If foreign unmarried/separate : $200/300k
If foreign and MFJ: $400/600
FBAR: Must report FinCEN Form 114 if…
Foreign accounts >$10k combined.
AMT - if you’re subject to it this year should you accelerate income?
Yes
AMT - if you’re subject to it this year should you defer deductions?
Yes
