Types of Individual Taxes Flashcards
Look at AGE to determine any eligible additional deductions (typically 65+)
65+ gives yo an additional standard deduction of $1250
2) FICA: Federal Insurance Contributions Act
Commonly known as Payroll Taxes, they pay for Social Security (OASDI: Old Age, Survivors and Disability) and Medicare (typically 7.65% altogether).
When individuals have to pay this it is usually because they are SELF-EMPLOYED
(where they pay 12.9 for OASDI, 2.9 for Medicare)
3) FUTA: Federal Unemployment Tax Act
Primarily what businesses pay to the government for employees who earn more than $1500 in a given year AND who were not contract workers
4) AMT: Alternative Minimum Tax or millionaire’s tax
Used when deductions go past the limit and taxpayer can be accused of not paying his fair share of the collective tax burden. Alternative Minimum Tax takes a look at multiple income streams and charges the individual for income tax plus any amount above the exemption that is also higher than the exemption ($70,300 for single; $109,400 for MFJ)
GST: Generation Skipping Tax
Applies to recipients who are more than 37.5 years younger than the donor OR, if related, there is a generation between the two (Grandparents to Grandchild if parents are still alive)
- LIFETIME EXEMPTION: $11.18M; taxable at 40% for anything above; previously 5.45M)
- Recorded on FORM 709 (you dip into lifetime exemption with each gift that went over annual exemption)
Gift Tax
ANY TRANSFER where donor does not receive something of equal value
- LIFETIME EXEMPTION: $11.4M
- ANNUAL EXEMPTION: $15K to a single person
special note about Gifts and GST Taxes
The value of your lifetime gifts comes off the lifetime exemption first; then any exemption that is left over is applied to your estate’s value.
The gift tax and the estate tax share the same $11.4 million exemption under the umbrella of a unified tax credit.
