Taxes Flashcards
How do Health Savings Account (HSA) contribution impact an individuals tax return?
It is an “above-the-line” deduction unless it is made through the employer’s cafeteria plan.
What are the 2012 standard mileage rates?
- $0.555 for business use
- $0.14 for charity use
- $0.23 for medical or moving use
What is the 2012 FUTA rate?
6% of the 1st 7k of income
Is unemployment income taxable?
It is considered repayment of lost wages so will be taxed as income.
What are the 2012 income limits that affect how social security income is taxed (and what are the rates)?
50% 85%
Single: 25k 34k
Joint: 32k 44k
For 2012, how is the social security benefit reduced due to other income?
Prior to full retirement age (FRA), benefit is reduced $1 for every $2 of income over $14,640.
In year of FRA, reduction is $1 for every $3 of income over $38,880.
No reduction after FRA.
How many years are subject to the”second disposition” rule?
2
What are the steps of a recapitalization freeze transaction? (2)
1) change from single owner type entity to multiple owner type
2) create different ownership interests in the company
2012 exemption amount
$3800
Exclusion or above the line items
Inheritance Gifts rcvd Muni interest Workers comp HSA controls Alimony paid IRA contributions Student loan interest Tuition 1/2 of self employment
IRA phase out for 2012
58-68k single
92-112k JNT
Note: active stratus with ER plan changes JNT to 173-183k
Roth phase out for 2012
110-125k SGL
173-183k JNT
Student loan interest phase out (2500)
60-75k SGL
125-155k JNT
4 classifications of property
1) realty
2) personalty
3) tangible
4) intangible
Property uses wrt taxes
1) trade or business
2) production of income
3) inventory (no depreciation)
4) personal use
5 year property
ACC
Auto
Computer
Copiers
7 year property
Furniture
Equipment
15 year property
Landscape improvements like fences, sidewalks, driveways
Realty depreciation
27.5 y residential
39 y commercial
S179 effect on basis
Reduces basis. Must be adjusted PRIOR to calculating 1st year depreciation
S179 max & phaseout for 2012
139k or taxable income which ever is least
Phase out $560k
S1245 recapture
Personalty prop
S1250 recapture
Realty depreciation
Look back rules in S1231
If 1231 gain in current year…must be recharacterized by previous years 1231 losses (which will be treated as OI)
S1250 gains taxed at what rate
25%
S1245 gains taxed at what rate?
Ordinary income
Excluded items for s1031
Stocks and bonds
Livestock of different sexes
Inventory
Is s1031 boot taxable?
Yes
S121 exclusion
SGL 250k
JNT 500k
Cap gain exclusion on sale of primary residence
S121 requirements
1) Principal residence in 2 of prior 5 years
2) once every 2 years
3) partial exclusion for health, job, or unforeseen stuff
Income limitation to casualty & theft loss reduced by
Lesser of FMV or adj basis
- Insurance
- 10% AGI
- $100 floor per loss
1244 allows
Up to 100k (jnt return) to be treated as ordinary loss. Overage is a capital loss.
Above the line adjustments
IRA Alimony Interest forfeitures Half self employment tax Student loan interest
Itemized deductions
Home mortgage interest Prop taxes Medical expenses State and local taxes Investment interest expense Charitable contributions Casualty & theft losses Misc Tier II misc
Tax credits
Dependent care Child tax credit Elderly disabled Foreign tax General business Education
Professional service corporations
Call AAA for HELP
Accounting
Actuarial
Architecture
Health
Engineering
Legal
Performers
PSC tax rates
Flat 35%
Business accumulated earning tax penalty
15% on amount over 250k that doesn’t have a valid business purpose
Negligence penalty (accuracy mistakes)
20% of the underpayment
Civil fraud penalty
75% of underpayment
Failure to file penalty
5% of due taxes PER MONTH capped at 25%
Failure to pay penalty
1/2% of taxes due PER MONTH capped at 25%
Estimated taxes
If under 150k, lesser of
90% of current year’s taxes
OR
110% of previous year’s taxes
You can choose either if over 150k
Who files and what are the exceptions
Don’t file if income is less than standard deduction plus exceptions
UNLESS
1) >$400 self employment income
2) =>$110 if church income (if it doesn’t pay SS)
3) rcv’d advance income credit from ER
