Chapter 2: Wages,income, And Taxes

Front 1

For tax purposes, when is a person's marital status is determined?

Back 1

it is considered determined as of December 31st.

Front 2

How do you round dollars amounts?

Back 2

1-49¢ round down ($1943.21 = $1943)
50-99¢ round up ($2762.73 = $2763)

Note: When rounding from multiple source documents, include cents when adding and round off the total (Pub 17, page 14)

Front 3

How do you round percentages?

Back 3

Round to 2 places after decimal point or 4 places after the decimal point (27.86% or .2786)

Note: When rounding from multiple source documents, include cents when adding and round off the total (Pub 17, page 14)

Front 4

Adjusted Gross Income

Back 4

Total of all income less any Adjustments (Not available on 1040EZ)

Front 5

2009 three different Federal Standard Deductions?

Back 5

Single and Married Filing Separately- $5,700
Married Filing Jointly and Qualifying Widower- $11,400
Head of Household - $8350

Front 6

What is the Making Work Pay Credit?

Back 6

6.2% of earned or net self-employment income (Limit $400 or $800 if MFJ)
Phased out at $95,000 ($190,000 MFJ)
Reduced if taxpayer received:
$250 Economic Recovery Payment
$250 Government Retiree Credit

Front 7

State Oregon's general rule on taxable income?

Back 7

Oregon taxes residents on all sources of income
Oregon taxes nonresidents on income earned from Oregon sources
Part-year residents
Taxed on income from all sources while an Oregon resident
Taxed on all Oregon source income while a nonresident

Front 8

Who is an Oregon resident?

Back 8

An Oregon resident is someone who is:
Domiciled in the state of Oregon
Considers Oregon to be home; a place to return from an absence
Is not domiciled in Oregon but maintains a residence in Oregon and spends more than 200 days in Oregon during the year

Front 9

Special-case Oregon residents: Qualifications to be considered a Non-Resident

Back 9

-No personal residence in Oregon for you or your family during the year
-Your personal residence is outside of Oregon for the entire year
-You spend less than 31 days in Oregon during the year

Front 10

Identify the four Oregon tax forms?

Back 10

Form 40S
Form 40
Form 40P
Form 40N

Front 11

Federal tax liability subtraction

Back 11

Oregon allows a subtraction from income of the current federal tax liability
-Maximum for 2009 was $5850 ($2925 if Married/Registered Domestic Partner filing separately)
-Phased out if AGI is $145,000 ($290,000 MFJ)
-Reduced by Making Work Pay and First Time Homebuyer's Credits

Front 13

CREDITS

Back 13

REDUCTIONS OF TAX LIABILITY ALLOWED FOR VARIOUS PURPOSES TO TAXPAYERS WHO MEET THE QUALIFICATIONS. SOME CREDITS ARE REFUNDABLE FOR ANY AMOUNT IN EXCESS OF THE TAX LIABILITY, OTHERS ONLY REDUCE TAX LIABILITY. SOME CREDITS MAY BE CARRIED TO OTHER TAX YEARS

Front 14

EARNED INCOME

Back 14

INCOME DERIVED FROM PERSONAL SERVICES AS AS OPPOSED TO INCOME GENERATED BY INVESTMENT PROPERTY OR OTHER SOURCES.

Front 15

EXEMPTION

Back 15

AN AMOUNT, ALLOWED BY LAW, AS A REDUCTION OF INCOME THAT WOULD OTHERWISE BE TAXED. (3650.00 FOR 2009)

Front 16

INCOME

Back 16

FINANCIAL GAIN DERIVED FROM CAPITAL, LABOR, OR A COMBINATION OF THE TWO.

Front 17

MEDICARE PART A

Back 17

TAX TAKEN OUT OF AN EMPLOYEES WAGES, OR THE SAME TAX PAID BY A SELF-EMPLOYED PERSON ON NET SELF-EMPLOYMENT INCOME. THE MEDICARE RATE IS 1.45% OF GROSS WAGES (2.9% FOR SELF-EMPLOYED INDIVIDUALS).

Front 18

SOCIAL SECURITY TAX WITHHELD

Back 18

EMPLOYEE'S SHARE OF SOCIAL SECURITY TAX TAKEN OUT OF THE EMPLOYEE'S PAY AND SUBMITTED ALONG WITH THE EMPLOYER'S SHARE TO THE IRS BY THE EMPLOYER. BOTH THE EMPLOYEE AND THE EMPLOYER PAY 6.2% OF THE FIRST 106,800 OF THE EMPLOYEE'S GROSS WAGES (FOR 2009)

Front 19

UNEARNED INCOME

Back 19

TAXABLE INCOME NOT RECEIVED FOR PERSONAL SERVICES PERFORMED (EARNED INCOME). SUCH AS INCOME, RECEIVED FROM THE INVESTMENT OF CAPITAL OR OTHER PROPERTY, SUCH AS INTEREST, DIVIDENDS, AND ROYALTIES. IT ALSO INCLUDES PENSIONS, ALIMONY UNEMPLOYMENT COMPENSATION, AND OTHER INCOME.

Front 20

TAXABLE INCOME

Back 20

IS ADJUSTED GROSS INCOME LESS ITEMIZED DEDUCTIONS OR THE STANDARD DEDUCTION, LESS ALLOWABLE PERSONAL AND DEPENDENT EXEMPTION AMOUNTS.

Front 21

TAX LIABILITY

Back 21

THE AMOUNT OF TOTAL TAX DUE THE IRS AFTER ANY CREDITS AND BEFORE TAKING INTO ACCOUNT ANY ADVANCE PAYMENTS (WITHHOLDING, ESTIMATED PAYMENTS,ETC.) MADE BY THE TAXPAYER.

Front 22

SOCIAL SECURITY WAGES

Back 22

TOTAL WAGES PAID TO AN EMPLOYEE, THAT ARE SUBJECT TO THIS TAX. THIS AMOUNT DOES NOT INCLUDE TIPS. WAGES ARE ALSO SUBJECT TO MEDICARE TAX.

Front 23

Who uses form 40S?

Back 23

if all of the following are true:

-Full-year resident.
-Income is onlhy from wages, interest, ordinary dividends, unemployment, fellowship grants and taxable scholarships not used to pay for housing.
-claim the stardard deduction.
-OR taxable income is 100,000 or less.
-No pension or annuity income or IRA distributions.
-Claim less than three "other credits."
-Don't owe penalty or interest.

Front 24

Who uses form 40?

Back 24

If both of the following are true:
-Full-year OR resident.
-Can't use Form 40S.
Or if any ONE of the following is true:
-Have adjustments on income on 1040.
-OR additions and subtractions other than the federal tax subtraction.
-itemize deductions on the OR return.
-MFS and spouse itemizes deductions
-Nonresident alien who lived in OR the entire year.
-Claiming the military active duty subtraction.
-Owe Penalty or interest.
-Want to apply all or part of the current year's refund to 2010 estimated taxes.

Front 25

Who uses form 40P?

Back 25

Use if any ONE of the following is true:
-Part-year resident who moved into or out of OR during the year.
-MFJ and spouse is a full-year OR resident and one is a Part-year OR resident.

Front 26

Who uses form 40N?

Back 26

Use if any ONE of the following is true:
-Nonresident of OR
-Special-case OR resident
-MFJ and one or both is a nonresident.

Front 27

What are two common items reported on the 1099-G?

Back 27

Unemployment Income and State Tax Refunds.

Front 28

What are the five steps that must be taken to compute taxable income?

Back 28

-Determine total income
-Determine total adjustments to income
-Subtract total adjustments from total income to arrive at AGI
-Subtract standard deduction or itemized deductions from AGI
-Subtract total exemptions to arrive at taxable income.

Front 29

If a taxpayer’s W-2 is incorrect what should he do?

Back 29

If the name or SSN is incorrect, he may correct it
If the wages or withholding are incorrect, he should contact his employer for a corrected W-2

Front 30

What income is taxed for Oregon residents? Part-year? Non-residents?

Back 30

-Full year resident - Worldwide income from all sources
-Part year resident - World-wide income from all sources while an Oregon resident; Oregon source income while a nonresident
-Nonresident – Oregon source income

Front 31

How much of unemployment is excluded from income?

Back 31

$2400

Front 32

What happens if you don’t comply with Oregon’s signature requirements?

Back 32

$100 fine for each omission

Front 33

What three credits in the “payments” section of the federal return, reduce the federal tax liability subtraction?

Back 33

-Making Work Pay Credit, -Homebuyer’s Credit
-the refundable portion of the American Opportunity Credit

Front 34

When must you use the tax chart instead of the tax tables for computing Oregon tax?

Back 34

When taxable income exceeds $50,000

Front 35

What is the first date a substitute W-2 may be filed?

Back 35

February 15th

Front 36

Schedules and forms are part of the return and are submitted to the IRS along with Forms 1040A or Form 1040, True or False?

Back 36

True

Front 37

Oregon residents are taxed on all sources of taxable income, true or false?

Back 37

True

Front 38

The Social Security number listed first in the heading on Form 1040 should always be used in headings on additional tax forms. True or False?

Back 38

False,If MFJ, usually the first SS# listed in the heading should be used on all the forms,however certain forms require that the social security number of the taxpayer that earned the income to be used.

Front 39

A taxpayer is required to use the OR F40 if he has more than 50K of taxable income. True or False?

Back 39

False, if total taxable income is over 100K.

Front 40

There are three types of gross income: earned income, unearned income, and retirement income. True or False?

Back 40

False, earned income and unearned income.

Front 41

Sally and John were married on 12/31. Sally has yet to update her name on her SS card to reflect her name change. Sally will use her maiden name on her return until she gets the change made. True or false?

Back 41

True, information on the return must match info filed with the SSA.

Front 42

An OR resident can be treated as a nonresident if which of the following are true:
A. The resident lived outside of OR the entire year.
B. The resident didn't keep a home in OR during any part of the year.
C. The resident spent less than 31 days in OR during the year.
D. All of the above.

Back 42

D. All of the above.

Front 43

Ginger, a nurse at Highland hospital, is provided a fee lunch each workday in the hospital cafeteria so that she will be available for emergencies. The estimated value of the free meals she received in 2009 was $450, although the cost to the hospital for the meals was approximately $200. Ginger must report income from these meals of:
A:$0 B:$200 C:$250 D:$450

Back 43

A: $0; Meals and lodging furnished on the employer's business premises and for the employer's convenience, and in the case of lodging, as a condition of employment, are not includible in wages.

Front 44

What is federal taxable income?
A. income after deductions?
B. Total Income?
C. AGI less exemptions?

Back 44

D. AGI less standard deduction(or itemized deductions) less exemptions.

Front 45

Oregon's Federal Tax Liability Subtraction includes all of the following except:
A: Alternative minimum tax.
B: Tax from early withdrawal from an IRA.
C: Self-Employment tax.
D: Income tax after credits.

Back 45

C: Self-Employment tax. Federal Tax Liability Subtraction does not include self-employment tax, social security/medicare tax on tips or advanced earned income credit payments.

Front 46

Which of the following types of income is not specifically excluded from federal gross income:
A: Compensation for personal injuries.
B: Compensation for services, including fees, commissions, and other fringe benefits.
C: Federal income tax refunds.
D: Gifts and inheritances.

Back 46

B: Compensation for services, including fees, commissions, and other fringe benefits.
Pub 17, part 2, ch 5.

Front 47

Oregon statue requires that all pad preparers sign and include their license number on which returns:
A. All returns.
B. Federal returns only.
C. Oregon returns only.
D. out-of-state returns only.

Back 47

A. All returns.

Front 48

What form is used as a substitute for the W-2?

Back 48

Form 4852.