2013 Tax Limits, Thresholds, Requirements, And Phaseouts

Front 1

What are the gross income filing requirements for single non-dependents?

Back 1

$10,000 or $11,500 for age 65+

Stan. Ded. + Pers. Exempt (+ age mod if appro.)

6100+3900=10,000 (+1500=11,500 if appro.)

Hint 1

Pg. 3.5

Front 2

What are the gross income filing requirements for head of household non-dependents?

Back 2

$12,850 or $14,350 for 65+

Stan. Ded. + Pers. Exempt (+ age mod if appro.)

8950+3900=12,850 (+1500=14,350 if appro.)

Hint 2

Pg. 3.5

Front 3

What are the gross income filing requirements for qualifying widow(er) non-dependents?

Back 3

$16,100 or $17,300 for 65+

2x Stan. Ded. + Pers. Exempt (+ age mod if appro.)

12,200+3900=16,100 (+1200=17,300 if appro.)

Hint 3

Pg. 3.5

Front 4

What are the gross income filing requirements for MFJ non-dependents?

Back 4

$20,000 or $21,200 for one 65+ or $22,400 for both 65+

2x Stan. Ded. + 2x Pers. Exempt (+ 1 or 2x age mod if appro.)

12,200+7800=20,000 (+1200=21,200 or 22.400 if appro.)

Hint 4

Pg. 3.5

Front 5

What are the gross income filing requirements for MFS non-dependents?

Back 5

$3,900 regardless of age.

Hint 5

Pg. 3.5

Front 6

What are the community property states?

Back 6

Washington, Idaho Wisconsin

California

Arizona

Nevada

New Mexico

Texas, Louisiana,

Hint 6

Pg. 3.5

Front 7

What three factors determine filing requirements for non-dependents?

Back 7

-Income

-Age

-Marital Status

Hint 7

Pg. 3.2

Front 8

What are the filing requirements for dependents?

Back 8

-CANNOT take personal exemption

-$1000 or earned income +$350

Hint 8

Pg. 3.8

Front 9

What other two types of TP's must file a return?

Back 9

-Owes uncollected Medicare and SS tax

-Self Employment profit of $400 or more

Hint 9

Pg. 3.9

Front 10

When can a non-resident alien spouse file a joint return?

Back 10

-Married to a US Citizen or resident alien at the end of the year

-Both spouses agree to report worldwide income for the entire year

Hint 10

Pg. 3.11

Front 11

Who is an injured spouse?

Back 11

A spouse that filed a joint return and the other spouse has past-due federal debt (past taxes, student loans, child/spousal support payments)

Hint 11

Pg. 3.12

Front 12

How does one qualify as an injured spouse and what form do they file?

Back 12

-Injured spouse must not be legally obligated to pay the past due debt

-Injured spouse made or reported tax payments or claimed a refundable tax credit

Form 8379

Hint 12

Pg. 3.12

Front 13

Who is an innocent spouse?

Back 13

A spouse that filed a joint return and later discovered the other spouse understated income or overstated deductions/exemptions.

Hint 13

Pg. 3.12

Front 14

How does one qualify as an injured spouse?

Back 14

-Must have filed a joint return

-Must not have known of the omission

Form 8857

Hint 14

Pg. 3.12

Front 15

Under what circumstances may a tax professional continue to represent a client after a conflict of interest has been identified?

Back 15

-If it is reasonable to believe they can represent the client(s) without conflict

-Get a signed consent from the clients

Hint 15

Pg. 3.12

Front 16

What is AGI and its definition?

Back 16

Adjusted Gross Income - Gross Income minus allowable deductions.

Hint 16

Chapter 2

Front 17

What is a credit?

Back 17

Reductions on tax for qualified tax payers.

Hint 17

Chapter 2

Front 18

What is an exemption?

Back 18

A specific amounts allowed by law as a reduction of income.

Hint 18

Chapter 2

Front 19

What is Federal Income Tax?

Back 19

An advance payment from income towards federal income.

Hint 19

Chapter 2

Front 20

What is gross income?

Back 20

Total worldwide income regardless of source

Hint 20

Chapter 2

Front 21

What is income?

Back 21

A gain of capital and/or labor.

Hint 21

Chapter 2

Front 22

What is the Medicare Part A tax?

Back 22

1.45% tax paid by the each the employer and employee or a 2.9% tax paid by the self employed.

Hint 22

Chapter 2

Front 23

What is the Social Security Tax?

Back 23

6.2% tax paid by the each the employer and employee or a 12.4% tax paid by the self employed.

Hint 23

Chapter 2

Front 24

What are Social Security Wages?

Back 24

Wages subject to the Social Security tax.

Hint 24

Chapter 2

Front 25

What is a Tax Liability?

Back 25

The tax due after credits but not including prepayments.

Hint 25

Chapter 2

Front 26

What is Taxable Income?

Back 26

The adjusted gross income less deductions and exemptions.

Hint 26

Chapter 2

Front 27

What is Unearned Income?

Back 27

Any income not from services performed.

Hint 27

Chapter 2

Front 28

What are the two types of gross income giving examples of each?

Back 28

Earned: wages, salaries, and tips

Unearned: Interest, royalties

Hint 28

Chapter 2 Handout

Front 29

What are the three individual income tax forms?

Back 29

1040ES, 1040A, 1040

Hint 29

Chapter 2 Handout

Front 30

What does code D in box 12 signify?

Back 30

401(k) distributions

Hint 30

Chapter 2

Front 31

On what form does the employer report wage and income information?

Back 31

Form W-2

Hint 31

Chapter 2

Front 32

What does code DD in box 12 signify?

Back 32

Employer health contributions.

Hint 32

Chapter 2

Front 33

What does it mean if the "retirement plan" box in box 13 of form w–2 is checked?

Back 33

The employee is an active member of a qualified retirement plan.

Hint 33

Chapter 2

Front 34

What should employees do if they think their W–2 is not correct?

Back 34

If a letter box is suspected verify the information. If a check box is suspected request a corrected w–2 from the employer.

Hint 34

Chapter 2

Front 35

What are the six basic steps to compute income tax?

Back 35

1. Determine total income
2. Determine adjustments
3. Subtract adjustments from income to get AGI
4. Subtrack deductions
5. Subtract exemptions
6. For 100,000 or less use the tax table to determine tax. for 100,000 or more use the tax computation worksheet.

Hint 35

Chapter 2

Front 36

What is the personal exemption?

Back 36

$3900

Hint 36

Chapter 2

Front 37

Under what circumstances must a tax payer use the tax table to determine tax liability?

Back 37

When income is less than $100,000

Hint 37

Chapter 2

Front 38

True or false: nonresident aliens must file a Form 1040PR.

Back 38

False. nonresident aliens file form 1040NR.

Hint 38

Chapter 2

Front 39

True or false: Residents of Puerto Rico must file form 1040PR?

Back 39

True

Hint 39

Chapter 2

Front 40

Who is a Dependent?

Back 40

Someone who meets

-Dependent tax payer test

-Joint Return Test

-Citizen or resident test

Hint 40

Pg. 4.2

Front 41

What are the 5 tests for a Qualified Child?

Back 41

-Age

-Relationship

-Residency

-Support

-Joint

Hint 41

Pg. 4.2

Front 42

What relationships are allowed for a QC?

Back 42

Son, daughter, brother, sister, adopted, foster, or descendants of any of these.

Hint 42

Pg. 4.3

Front 43

What is the Age test for a QC?

Back 43

-Under 19

-Under 24 if full-time student

-Any age if permanently and totally disabled

Hint 43

Pg. 4.3

Front 44

What is the Residency test for a QC?

Back 44

-Lived with TP more than 6 months of the year

Hint 44

Pg. 4.3

Front 45

What is the Support test for a QC?

Back 45

-Cannot provide more than half of their own support

Hint 45

Pg. 4.4

Front 46

What is a Qualifying Relative?

Back 46

Must pass four tests:

-Relationship or member of household

-Gross Income

-Support

Not a QC

Hint 46

Pg. 4.4

Front 47

What is the Relationship test for a QR?

Back 47

Son, daughter, brother, sister, adopted, foster, or descendants of any of these, mother, father, descendant of either, aunt, uncle, in-laws, and anyone who lives with you the entire year. Cannot violate any law.

Hint 47

Pg. 4.4

Front 48

What is the Gross Income test for QR?

Back 48

Must have a gross income less than the exemption amount ($3900 for 2013).

Hint 48

Pg 4.5

Front 49

What is the Qualified Child requirement for a QR?

Back 49

Cannot be a qualified child of any TP.

Hint 49

Pg. 4.5

Front 50

What is the Dependent Taxpayer Test?

Back 50

Any taxpayer who may be claimed by another person on their return may not claim any dependents. IE, no dependents of dependents.

Hint 50

Pg. 4.7

Front 51

What is the Joint Return Test?

Back 51

A TP cannot claim a married person as a dependent if the married dependent files a joint return, except if they file only to claim a refund.

Hint 51

Pg. 4.7

Front 52

What is the Citizen or Resident test?

Back 52

Dependent must be a US citizen, US resident, or US national or a resident of Canada or Mexico.

Hint 52

Pg. 4.8

Front 53

What is the exception to the Resident test?

Back 53

A non-resident adopted child is a resident if adopted by a US citizen and lived with them the entire year.

Hint 53

Pg. 4.8

Front 54

What is considered in computing the support test?

Back 54

Items necessary for a dependents care as well as luxuries and items used purely for entertainment.

Hint 54

Pg. 4.9

Front 55

What are examples that are included in Support?

Back 55

Food, lodging, clothing, medical, dental, etc.

Hint 55

Pg 4.9

Front 56

In general terms, what is used to determine whether the TP provided over half of the dependents lodging?

Back 56

Fair Market Value

Hint 56

Pg 4.9

Front 57

What are examples of items NOT included in support?

Back 57

Social Security and Medicare Taxes, Life Insurance, Funeral Expenses, etc.

Hint 57

Pg 4.10

Front 58

If two or more TP's can claim someone as a dependent, and none of them provided more than half of the dependents support, what must be done?

Back 58

-TP's provide a Multiple Support Agreement

-TP who gets to claim files a Multiple Support Declaration (form 2120).

Hint 58

Pg 4.11

Front 59

Who qualifies to participate in a Multiple Support Agreement?

Back 59

Any qualified claimant who provides more than 10% but less than 50% of the dependents support.

Hint 59

Pg 4.11

Front 60

When two or more TP's cannot agree on a Multiple Support Agreement, what happens?

Back 60

No one is allowed to claim the dependent.

Hint 60

Pg. 4.11

Front 61

What are the qualifications for the Child Tax Credit?

Back 61

-TP must have a QC

-QC must be under 17 yo

-QC must be claimed on TP's return

-QC must be a US citizen, national, or resident

Hint 61

Pg 4.14

Front 62

What are the income phaseouts for QC?

Back 62

-$75,000 S, HOH, QW

-$110,000 MFJ

-$55,000 MFS

Hint 62

Pg 4.14

Front 63

Who may file as Head of Household?

Back 63

-TP is unmarried or considered unmarried at the end of the tax year

-TP maintained more than half of the household

-TP maintained a household more than half the year for a QC or QR, or a mother or father for the entire year, whom they can claim as an exemption

Hint 63

Pg 5.2

Front 64

Is the fair rental value of a home included in the cost of maintenance for HOH?

Back 64

No

Hint 64

Pg 5.3

Front 65

True or False: The TP's rental home owned by the TP's relative is included in the tally of maintenance for HOH.

Back 65

False

Hint 65

Pg 5.3

Front 66

What are the two exceptions to the HOH Requirements?

Back 66

-The QC cannot be married unless the TP can claim an exemption for that child

-A non-relative dependent cannot qualify a TP as HOH. Dependent must be related to the TP as indicated for QR.

Hint 66

Pg 5.3

Front 67

Can a TP with a Multiple Support Agreement qualify for HOH?

Back 67

No-HOH must provide over half of the support for the tax year.

Hint 67

Pg 5.6

Front 68

Can a TP who was a non-resident alien for any part of the year file for HOH?

Back 68

No

Hint 68

Pg 5.6

Front 69

Under what conditions can a married person be considered "unmarried" for tax purposes?

Back 69

-Must file a separate return

-Must have provided more than half the cost of maintaining their home

-The home must have been the primary abode for the TP and their QC or QR for more than half the tax year

-Spouse must not have lived in the home at any time during the last 6 months of the tax year.

Hint 69

Pg 5.6

Front 70

Who qualfies to file as a QW?

Back 70

-The TP's spouse died in either of the two tax years immediately preceding the current tax year

-The TP paid more than half the cost of maintaining a home for a son, daughter, step-son or step-daughter the entire year

Hint 70

Pg 5.7

Front 71

True or False: To qualify for QW, the TP must not have filed MFJ the year their spouse died.

Back 71

False. They MUST file MFJ the year their spouse died to qualify for QW the two following years.

Hint 71

Pg 5.7

Front 72

In what order can a QC be claimed per the Tie Breaker Rules?

Back 72

If one, the parent; If two parents, the custodial parent or if equal the parent with the higher AGI; If no parents, the person with the highest AGI; If parent can claim but does not, the person with the highest AGI IF greater than the parents.

Hint 72

Pg 5.11

Front 73

What is Interest?

Back 73

Money paid or received for the use of money.

Hint 73

Pg 6.1

Front 74

What amount of interest triggers a Schedule B?

Back 74

More than $1500

Hint 74

Pg 6.2

Front 75

When MUST a TP file a Schedule B?

Back 75

-If interest is more than $1500

-If any interest from foreign investments was received

-Interest is not properly attributable to the TP

-If Interest is from a seller-financed mortgage

-If interest is from a US Savings Bond excluded from income

Hint 75

Pg 6.2

Front 76

What 3 types of interest are not taxable?

Back 76

-Municipal Bond

-Tax Exempt

-Savings Bonds used for education

Hint 76

Chapter 6

Front 77

If during the tax year, the TP has financial interest or signature authority over a financial account in a foreign country, what form may they have to file?

Back 77

FinCEN Form 114

Hint 77

Pg 6.2

Front 78

If you get a 1099-INT with interest that does not belong to you, what should you do?

Back 78

-Report it on Schedule B then subtract it back out

Hint 78

Pg 6.5

Front 79

What must a seller, who is financing the sale of their house to a buyer, report?

Back 79

-Buyers name

-Address

-SSN

-Interest received each year

Hint 79

Pg 6.5

Front 80

On what form is seller financed loan interest reported?

Back 80

Schedule B

Hint 80

Pg 6.5

Front 81

Financial institutions will report tax-exempt interest on what form?

Back 81

Form 1099-INT

Hint 81

Pg 6.5

Front 82

How long does it take for a

-EE Savings Bond

-Treasury Bill

to mature?

Back 82

-30 years

-1 year or less

Hint 82

Pg 6.8

Front 83

Does the federal government tax Municipal Bond Interest?

Back 83

No

Hint 83

Pg 6.9

Front 84

What are the most common types of dividend distributions?

Back 84

-Ordinary dividend incl. qualified

-Capital gains

-Non-Taxible

Hint 84

Pg 6.10

Front 85

When must a corporation file a 1099-DIV?

Back 85

When distributed dividends are $10 or more.

Hint 85

Pg 6.10

Front 86

How long are capital gains kept to qualify for long-term treatment?

Back 86

Generally, 1 year or more

Hint 86

Pg 6.12

Front 87

What are the maximum tax rates on qualified dividends?

Back 87

-0% on any amount that otherwise would be taxed at 10% or 15%

-15% on any amount that otherwise would be taxed at rates above 15% but below 39.6%

-20% on any amount that otherwise would be taxed at 39.6%

Hint 87

Pg 6.13

Front 88

What is a NIIT tax?

Back 88

Net Investment Income Tax

Hint 88

Pg 6.15

Front 89

What is the NIIT tax rate?

Back 89

3.8%

Hint 89

Pg 6.15

Front 90

What is MAGI?

Back 90

Modified Adjusted Gross Incomed

Hint 90

Pg 6.15

Front 91

What are the Modified Adjusted Gross Income thresholds for the NIIT tax?

Back 91

-$250,000 MFJ, QW

-$200,000 S, HH

-$125,000 MFS

Hint 91

Pg 6.15

Front 92

What is the Kiddie Tax?

Back 92

A tax on the investment income on children.

Hint 92

Pg. 6.15

Front 93

What are the two rules for the Kiddie Tax?

Back 93

-If the child's interest and dividend income is less than $10,000 the parent may be able to add it to their tax return

-If the child's investment income is more than $2000, part of that income may be taxed at the parents tax rate

Hint 93

Pg 6.15

Front 94

What are the 7 conditions for a parent to include a child's investment income on the parents return?

Back 94

-Under 19, 24 if f/t student

-Child income is only from interest and dividend including capital gains dist. and Alaska Perm. Fund dividends

-Child's gross income is less than $10,000

-Child is required to file a return unless this election is made

-Child does NOT file a joint return

-No estimated tax payment was made for the year and no overpayment from prev. year was applied to this year

-No backup witholding was withheld according to backup withholding rules

Hint 94

Pg 6.16

Front 95

What are the two types of property?

Back 95

-Real property

-Personal property

Hint 95

Pg 7.2

Front 96

What are the two classes of personal property?

Back 96

-Tangible

-Intangible

Hint 96

Pg 7.2

Front 97

What are the four use classifications of property?

Back 97

-Personal use

-Investment use

-Business use

-Stock in Trade

Hint 97

Pg 7.2

Front 98

What is a Capital Asset?

Back 98

Generally, everything you own or use for personal or investment purposes

Hint 98

Pg 7.3

Front 99

What is Basis?

Back 99

The TP's investment in property for tax purposes

Hint 99

Pg 7.4

Front 100

Are losses on personal use assets deductible?

Back 100

No

Hint 100

Pg 7.5

Front 101

Gains of what uses of property are taxable?

Back 101

-Personal use property

-Investment use property

-Business use property

Hint 101

Pg 7.5

Front 102

Short term capital gains are taxed as what?

Back 102

Ordinary income

Hint 102

Pg 7.13

Front 103

What are the long term capital gains tax rates?

Back 103

-20% for TP's in the 39.6% tax bracket

-0% for TP's in the 10% or 15% tax bracket

-15% for all others tax brackets

-Collectibles gains 28%

Hint 103

Pg 7.13

Front 104

How much gain can TP exclude from the sale of their home?

Back 104

$250,000 ($500,000 MFJ and all qualifications are met)

Hint 104

Pg 7.25

Front 105

What are the qualifications to exclude gains from the sale of your home?

Back 105

-Ownership test (owned for at least 2 years in the past 5 years)

-Use test (Lived in home as primary home for at least 2 year in the past 5 years

-Did no exclude gain on another home within 2 years

Hint 105

Pg 7.25

Front 106

What are the requirements for QC?

Back 106

-TP must have a QC

-QC must be US citizen, Resident, or national

-Aged under 17

-QC Must be aDependent on TP's return

Hint 106

Pg 8.2

Front 107

What additional requirements do TP's need to qualify for the Additional Child Tax Credit?

Back 107

-Earned Income at least $3000

or

-3 or more QC

Hint 107

Pg 8.2

Front 108

What are the EIC qualifications for TP's w/o QC?

Back 108

-Have SSN

-Not MFS

-US citizen or resident alien all year

-No form 2555(EZ)

-Inv. Inc. less than $3300

-have earned income

-be at least 25yo

-not be a dependent of someone

-not be a QC of someone

-live in US for more than half year

-earned income+AGI < $14,340 ($19680 MFJ)

Hint 108

Pg 8.6

Front 109

What are the EIC qualifications for TP's with QC?

Back 109

-Have SSN

-Not MFS

-US citizen or resident alien all year

-No form 2555(EZ)

-Inv. Inc. less than $3300

-have earned income

-have QC

-have QC not claimed by more than one person

-not a QC of someone else

E.I.+AGI < 37,870 (43,210 MFJ) for 1 QC, 43038 (48,378 MFJ) for 2 QC, 46,227 (51,567 MFJ) for 3+ QC

Hint 109

Pg 8.6

Front 110

What are the Relationships for EIC?

Back 110

Son, daughter, stepchild, foster child, adopted child, dependents of these

Hint 110

Pg 8.7

Front 111

What are the age requirements for EIC

Back 111

-Under age 19 and younger than TP

-Full-time student under 24 and younger than TP

-Permanent and totally disabled regardless of age

Hint 111

Pg 8.7

Front 112

What are the residency requirements for EIC?

Back 112

Must have lived with TP in the US more than half the year

Hint 112

Pg 8.8

Front 113

What are the joint return requirements for EIC?

Back 113

Cannot file MFJ except to just claim a refund

Hint 113

Pg 8.8

Front 114

What if more than one TP can claim the EIC for a QC?

Back 114

They must decide between themselves who gets the QC. If more than one files the claim, the IRS will apply tie-breaker rules.

Hint 114

Pg 8.8

Front 115

When can a married TP file HOH for EIC purposes?

Back 115

If they can be considered "unmarried".

Hint 115

Pg 8.8

Front 116

Can a married TP file MFS and claim an EIC?

Back 116

NO

Hint 116

Pg 8.8

Front 117

How much investment income can a TP have and claim the EIC?

Back 117

$3300 or less

Hint 117

Pg 8.9

Front 118

If a child provides more than 50% of their support, can the be a QC for purposes of the EIC?

Back 118

Yes

Hint 118

Pg 8.9

Front 119

What is due diligence for EIC?

Back 119

-Complete and submit the checklist

-Compute the amount of credit

-Comply with knowledge requirement

-Retain records

Hint 119

Pg 8.18

Front 120

How much can an employee make in tips without reporting it?

Back 120

Less than $20/month

Hint 120

Pg 9.2

Front 121

Where are Allocated Tips reported by the employee?

Back 121

As income on their return

Hint 121

Pg 9.2

Front 122

What form is used to calculate Social Security and Medicare tax on unreported tip income?

Back 122

Form 4137

Hint 122

Pg. 9.3

Front 123

True or False: Alimony received is reported as income.

Back 123

True

Hint 123

Pg 9.5

Front 124

True or False: Paid alimony is reported as a deduction.

Back 124

False. It is an adjustment on pg 1 of form 1040.

Hint 124

Form 1040

Front 125

Where is bartering reported?

Back 125

Schedule C

Hint 125

Pg 9.5

Front 126

How is taxable scholarship money reported?

Back 126

As income on 1040, line 7 or 1040EZ, line 1. Write SCH on the dotted line with the amount.

Hint 126

Pg 9.5

Front 127

Where are gambling winnings reported? Gambling Losses?

Back 127

-Wins: 1040, line 21

-Losses: Itemized on Schedule A

Hint 127

Pg 9.8

Front 128

How is Long-Term Disability income is reported?

Back 128

-up to minimum retirement age: as wage income

-the day after minimum retirement age: as pension income

Hint 128

Pg 9.9

Front 129

True or False: Disability income is identified with code "D".

Back 129

False. It is identified as code "3".

Hint 129

Pg. 9.9