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57 Cards in this Set

  • Front
  • Back
What are qualified charitable organizations?
Generally, nonprofit groups that are charitable, religious, educational, scientific or literary in purpose, or that work to prevent cruelty to children or animals
A taxpayer donates money to a church, a worthy individual, a school for a scholarship fund, a school for tickets to an alumni banquet, Boy Scouts, Girl Scouts for camp fees for his daughter, YMCA for membership dues and YMCA for their building fund. Which, if any, are deductible?
Church, School for scholarship fund, Boy Scouts, YMCA building fund
Is the cost of items purchased to benefit a charitable organization deductible, for example ball tickets to raise money for a nonprofit hospital?
Only the amount paid in excess of the value of the item is deductible
What is the general deduction limit for charitable contributions?
50% of the taxpayer’s AGI. Lower limits apply for certain organizations and donations of appreciated property
What can be deducted by volunteer workers?
Out-of-pocket expenses for uniforms, equipment, supplies, transportation, food and lodging if away from home overnight
If a taxpayer chooses to take mileage instead of actual expenses, what is the mileage rate?
14 cents per mile
May a volunteer claim a deduction for the value of his time?
No
What is the allowable deduction for permitting a charitable organization to use property without charge?
No deduction is allowed for the use of property
A taxpayer wrote a check for a $500 donation to his church. Is his canceled check sufficient documentation to support his deduction?
No. Because the gift exceeds $249, the taxpayer must have written confirmation from his church.
What characteristics must an event have to qualify as a casualty or theft?
Identifiable event that is sudden, unexpected or unusual.
What types of damage or destruction qualify as casualties or thefts?
Severe weather, flood, fire, accident, earthquake, vandalism, terrorist attack, tidal wave, and unlawful taking of property.
Name some types of losses that would not qualify as a casualty or theft.
Damages paid for injury to another person or property owned by another person, damages caused by normal wear-and-tear, disease, or insects and the loss or disappearance of property without evidence of a casualty or theft.
By what amounts must all casualty and theft losses of personal property be reduced?
Insurance and other reimbursements
$500
10% of AGI
May a taxpayer claim a casualty loss for uninsured damage to his dependent teenager’s car if the car is registered in the dependent’s name?
No.
If the car is registered jointly in the taxpayer and dependent’s names?
Yes
What information must you obtain to determine the amount of casualty/theft loss?
Adjusted basis and the FMV of the property before and after event.
What can be used as a measure of the decrease in FMV?
The cost of necessary clean up or repairs to the property to return it to its condition immediately before the casualty
What is the allowable casualty or theft loss?
The lesser of the adjusted basis or the decrease in FMV
In what year is a casualty/theft loss deducted?
Generally, the year it occurred. If it is a presidentially declared disaster area, the taxpayer can take it either in the year it occurred or the previous year by filing an amended return
What are some general types of itemized deductions that are subject to the 2%-of-AGI floor?
Employment expenses, investment expenses, job-seeking expenses, hobby expenses and tax preparation expenses
Which expenses are reported on line 21 of Schedule A?
Un-reimbursed employment-related expenses.
Under what circumstances may unreimbursed expenses be reported directly on Schedule A, line 20 rather than on Form 2106 or 2106-EZ first?
When the taxpayer is not claiming meal, entertainment, travel or transportation expenses or any reimbursed expenses
What are deductible transportation expenses?
Those that involve the use of a motor vehicle for business purposes
What is commuting?
Driving back and forth to the regular place of work
Describe the optional method of deducting transportation expenses.
Using the standard rate of 55 cents per mile for business miles rather than taking actual expenses.
What conditions must be met to qualify to use the optional method?
Taxpayer must own or lease the vehicle
Must not use the vehicle for hire (taxicab)
Must not have had more than 4 vehicles in simultaneous business use during the year
Must use the optional method the first year the vehicle is placed into service (first used for business)
What educational expenses may be deducted by an employee on Schedule A?
Education intended to maintain or improve the taxpayer’s current job skills
What other tax options are available for employees taking job related courses?
Tuition and fees deduction or lifetime learning credit assuming all the requirements are met
What is the primary requirement to deduct job-seeking expenses?
Taxpayer must be seeking employment in the same occupation
What are some expenses that can be claimed directly on Line 21 without using Form 2106 or 2106-EZ?
Union dues, subscriptions to trade magazines, uniforms, dues to professional organizations, physical exams required by employer, tools, etc..
What expenses are reported on line 22 of schedule A?
Fees paid to obtain tax advice, for the preparation of tax returns, and electronic filing fees.
Are bank fees for products, such as refund anticipation loans deductible?
No
What expenses are reported on line 23 of schedule A?
All other miscellaneous itemized deductions subject to the 2% of AGI floor
Name some deductible investment expenses.
Legal fees paid to produce or collect taxable income, appraisal fees to determine the value of property donated to charity, fees paid to obtain investment advice
What is the limitation on deduction of hobby expenses?
Expenses are deductible only to the extent of hobby income
What are some miscellaneous itemized deductions that are not subject to the 2%-of-AGI floor?
Most common examples are gambling losses, impairment-related work expenses for handicapped individuals, decedent’s remaining basis in a pension or annuity and federal estate tax on decedent’s income.
Where are such miscellaneous expenses deducted?
Schedule A, line 28
What limitation is placed on gambling losses?
It is deductible only to the extent of gambling winnings reported as income
What type of information should be retained by the taxpayer if he wishes to deduct gambling losses?
Date and type of wagering activity
Name and address or location of gambling establishment
Names of other persons present with the taxpayer at the gambling establishment (eyewitnesses)
Amounts the taxpayer won and lost
At what AGI amount might a taxpayer’s itemized deductions be limited?
$166,800 ($83,400 MFS)
If the AGI is greater than the limit, by what percent might the deductions be limited?
2/3 of 3%
What is the most common taxable recovery?
State income tax refund
Under what circumstances is a refund of state income tax generally taxable?
When a taxpayer itemized deductions for the year the tax was paid.
Name two other types of recoveries that may be taxable if the taxpayer itemized?
Medical expenses and casualty/theft losses
Explain the Oregon Cultural Trust credit.
If a taxpayer makes a donation to an Oregon nonprofit cultural organization during the year, and makes a matching donation to the Trust for Cultural Development Account, the taxpayer may claim an Oregon tax credit. The credit equals 100% of the amount of the matching contribution to the Trust, limited to $500 per taxpayer ($1,000 on jointly filed returns)
If a deduction on the Schedule A is made for a contribution to the Oregon Cultural Trust, what needs to be done on the Oregon return?
An addition for the amount contributed to the Trust (if the taxpayer wants to claim the credit)
How does an artist’s deductible charitable contribution differ between the federal and Oregon return?
On the federal Schedule A, the contribution was limited to the cost of the work. On the Oregon return, the artist may subtract the fair market value of the art work less the deduction already claimed on Schedule A
What two types of workers may be able to deduct certain commuting expenses?
Loggers and Construction workers
How do you calculate the subtraction?
Take actual expenses for vehicle use (not standard mileage)
What requirements must be met for qualified construction workers?
Worked at one or more projects during the year (less than one year duration)
Sites are more than 50 miles from home
Must be a member of a recognized trade, craft or union
May not be management personnel
What requirements must be met for qualified loggers?
Worked at one or more logging operation sites during the year
Sites are more than 50 miles from home
Must be a faller or bucker who maintains their own equipment and is paid on a per-unit-cut-basis
May not be management personnel
What Oregon lottery winnings are not subject to Oregon tax?
Oregon will not tax winnings form any Oregon lottery ticket or play that results in winnings of $600 or less
If a taxpayer has Oregon lottery winnings of $500, how is it treated on the Oregon return?
Take a subtraction of $500 on the Oregon return
If you claimed gambling losses on your federal Schedule A, what is the possible consequence on the Oregon return?
There may be an addition on the Oregon return
Oregon gambling losses are limited to what?
Gambling winnings taxable on the Oregon return
If your state refund was taxable on the federal return, what is the adjustment that is made on the Oregon return?
There will be a subtraction of the refund from your Oregon income
If the federal itemized deductions were limited due to AGI, what will need to be done for the Oregon return?
An itemized deductions limitations worksheet will need to be completed to determine how much sales tax or income tax to subtract from itemized deductions