Unit 2 Flashcards
Individual Income Tax Formula
Gross Income - Adj/Deductions = AGI - Itemized/Standard - Qualified Business Income Deduction = TAXABLE INCOME x Tax Rate = GROSS TAX LIABILITY - Credits = NET TAX LIABILITY/REFUND
Is Alimony Gross Income
Before 2019: GRI for reciepient and deducted by payor
Is Child Support GI
NOT GI for recipient , Not deductible by payor
Alimony Recapture Formula
2nd Yr Recapture = 2nd Yr Alimony - (15k+3rd Yr Alimony)
1st Yr Recapture = 1st Yr Alimony - [ 2nd yr alimony - 2nd yr recapture +3rd yr alimony/2) +15k]
IS Debt Discharge GI
CAn result in GI if for services performed.
NO GI if bankrupcy, farm, principle residence
SS Benefits GI?
Not taxable unless other income is received.
Taxable SS Benefits Forumula
1)AGI (excluding SS)
2) +Taxexempt interest/foreign income
3)= Modified AGI
4)+50% SS
5)= PI
6) - BA (32k, 25, 0k)
7) = Excess PI (<0, 0$)
8) - Incremental 9) Base Amount (12k, 9k or 0k)
= Excess PI
10) Smaller of line 7or 8
11) 50% line 10
12) Smaller of 4 or 11
13) Multiplying 9 by 85%.
14) Add line 12 and 13
15) SS x 85%
16) TAXABLE BENEFITS = SMALLER OF 14 or 15
Gross Income Inclusion is based on relation of Provisional Income to Base Amount and Adj. Base Amount
TRUE
Base Amounts (SS Benefits)
32k MFJ
0$ MFS
25 Others
Adjusted Base Amounts (SS Benefits)
12k MFJ
0 MFS
9k Others
Are scholarships GI
NO
Employee Achievement Awards GI?
NO. if: Meaningful, safety, lengeth of service and < 400$ or 1.6k MUST be tangible property not cash.
Gross Income does not include benefits from
Diability, health, accident, wc.
Excluded Employer Provided Benefits includes:
up to 5k dependent care, life insurance proceeds where employer paid premiums, contributions by employer to long term care coverage.
Pensions GI?
Amounts withdrawn early are treated as recovery of contributions and NOT GI. Employer contributions are taxable.
Combat Zone Compensation GI?
Can exclude compensation = highest basic pay that enlisted person can get. +reimbursement for moving if military
Gift/Inheritance income?
NO but treasure and gamboling is
Adoption Expenses GI?
Paid by employer NOT GI. Max 14.3k
Phase out at 200k
Fringe Benefits GI?
No if no additional cost, employee discount <20%. up to 270$ parking , educational assistant up to 5.2k. Cash benefits are never excludable
Foreign Earned Income Exclusion Amount
107.6k$ Max. Must have tax home in other country, in foreign country 330 days . This is instead of Foreign Tax Credit
Employer withholds SS/Medicare for statutory employees if ..
COntract states all services are by them, no investment in equipment used, performed on continual basis.
Statutory employees cant be in retirement plans by employer
Can set up own plan
