Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
346 Cards in this Set
- Front
- Back
|
FOUR FACTORS DETERMINING FILING REQUIREMENT
|
GROSS INCOME, FILING STATUS, AGE, DEPENDENCY STATUS
|
|
|
DEFINE GROSS INCOME
|
ALL INCOME RECEIVED IN THE FORM OF MONEY, GOODS, PROPERTY, AND SERVICES, THAT IS NOT EXEMPT FROM TAX, INCLUDING SOURCES OUTSIDE OF THE US
|
|
|
IS SOCIAL SECURITY INCLUDED IN GROSS INCOME?
|
NOT UNLESS INDIVIDUAL IS MFS AND LIVED WITH HIS/HER SPOUSE DURING THE YEAR, OR 1/2 OF THE BENEFITS PLUS OTHER INCOME EXCEEDS $25,000 ($32,000 IF MFJ)
|
|
|
DOES GROSS INCOME INCLUDE GAIN FROM A SALE OF A PRINCIPAL RESIDENCE OR FOREIGN EARNED INCOME WHEN DETERMINING FILING REQUIREMENTS?
|
YES AND YES. EVEN IF GAIN FROM SALE OF THE HOME IS EXCLUDED FROM GROSS INCOME.
|
|
|
HOW IS COMMUNITY INCOME IN A COMMUNITY PROPERTY STATE HANDLED?
|
1/2 OF ANY COMMUNITY INCOME IS CONSIDERED EACH SPOUSE'S INCOME.
|
|
|
CALIFORNIA, NEVADA, WASHINGTON - REGISTERED DOMESTIC PARTNERS?
|
MUST REPORT 1/2 OF THE COMBINED COMMUNITY INCOME OF THE INDIVIDUAL AND HIS/HER PARTNER
|
|
|
WHAT CONSTITUTES GROSS INCOME FOR A SELF-EMPLOYED INDIVIDUAL?
|
SERVICE BUSINESS - GROSS INCOME = GROSS RECEIPTS
MANUFACTURING, MERCHANDISING, OR MINING - GROSS INCOME = SALES - COGS |
|
|
HOW IS MARITAL STATUS DETERMINED?
|
AS OF DECEMBER 31, OF THE TAX YEAR
|
|
|
WHEN IS AN INDIVIDUAL CONSIDERED TO BE 65?
|
THE DAY BEFORE THEIR 65TH BIRTHDAY
|
|
|
CAN A DEPENDENT CLAIM THEMSELVES?
|
NO, A DEPENDENT CAN NOT CLAIM A PERSONAL EXEMPTION AND MAY HAVE A REDUCED STANDARD DEDUCTION.
|
|
|
INDIVIDUAL FILING REQUIREMENTS
|
GROSS INCOME EXCEEDS THE SUM OF THE PERSONAL EXEMPTION ALLOWED FOR FILING STATUS PLUS THE STANDARD DEDUCTION, INCREASED FOR AGE AND/OR BLINDNESS
|
|
|
PERSONAL EXEMPTION AMOUNT 2011
|
$3,700 PER TAXPAYER
|
|
|
ADDITIONAL STANDARD DEDUCTION FOR AGE AND BLINDNESS FOR 2011
|
$1,150 PER PERSON (MARRIED AND QUALIFIED WIDOWER)
$1,450 PER PERSON (SINGLE AND HEAD OF HOUSEHOLD) |
|
|
WHO MUST FILE 2011 - SINGLE
|
UNDER 65 = GI > $9,500
65+ = GI > $10,950 |
|
|
WHO MUST FILE 2011 - HEAD OF HOUSEHOLD
|
UNDER 65 = GI > $12,200
65+ = GI > $13,650 |
|
|
WHO MUST FILE 2011 - QUALIFIED WIDOWER WITH DEPENDENT CHILD
|
UNDER 65 = GI > $15,300
65+ = GI > $16,450 |
|
|
WHO MUST FILE 2011 - MARRIED FILING JOINTLY
|
BOTH UNDER 65 = GI > $19,000
ONE SPOUSE 65+ = GI > $20,150 BOTH 65+ = GI > $21,300 |
|
|
WHO MUST FILE 2011 - MARRIED FILING SEPARATELY
|
ANY AGE = GI > $3,700
|
|
|
WHAT IS DEPENDENT GROSS INCOME?
|
GROSS INCOME = TOTAL EARNED PLUS UNEARNED INCOME
|
|
|
EARNED INCOME
|
SALARIES, WAGES, TIPS, PROFESSIONAL FEES, TAXABLE SCHOLARSHIPS, FELLOWSHIP GRANTS
|
|
|
UNEARNED INCOME
|
INVESTMENT-TYPE INCOME SUCH AS INTEREST, DIVIDENDS, AND CAPITAL GAINS. ALSO INCLUDES UNEMPLOYMENT, TAXABLE SS BENEFITS, PENSIONS, ANNUITIES, AND DISTRIBUTIONS FROM A TRUST
|
|
|
DEPENDENT FILING REQUIREMENT - SINGLE, UNDER 65, NOT BLIND
|
UEI > $950
EI > $5,800 GI > $950 OR EI (UP TO $5,500) PLUS $300 |
|
|
DEPENDENT FILING REQUIREMENT - SINGLE, 65+, OR BLIND
|
UEI > $2,400 ($3,850 IF 65+ AND BLIND)
EI > $7,250 ($8,700 IF 65+ AND BLIND) GI > $2,400 ($3,850 IF 65+ AND BLIND) OR EI (UP TO $5,500) PLUS $1,750 ($3,200 IF 65+ AND BLIND) |
|
|
DEPENDENT FILING REQUIREMENT - MARRIED, UNDER 65, NOT BLIND
|
UEI > $950
EI > $5,800 GI AT LEAST $5 AND SPOUSE ITEMIZES GI > $950 OR EI (UP TO $5,500) PLUS $300 |
|
|
DEPENDENT FILING REQUIREMENT - MARRIED, 65+, OR BLIND
|
UEI > $2,100 ($3,250 IF 65+ AND BLIND)
EI > $6,950 ($8,100 IF 65+ AND BLIND) GI WAS AT LEAST $5 AND SPOUSE ITEMIZES GI > $2,100 ($3,250 IF 65+ AND BLIND) OR EI (UP TO $5,500) PLUS $1,450 ($2,600 IF 65+ AND BLIND) |
|
|
WHEN CAN A PARENT ELECT TO REPORT THE CHILD'S INTEREST AND DIVIDENDS?
|
CHILD IS UNDER 19 OR A FULL TIME STUDENT UNDER 24 AT THE END OF THE YEAR
CHILD IS REQUIRED TO FILE A RETURN FOR 2011, EXCEPT FOR THIS ELECTION CHILD ONLY HAD INCOME FROM INTEREST AND DIVIDENDS INCLUDING CAPITAL GAIN DISTRIBUTIONS AND ALASKA PERMANENT FUND DIVIDENDS THE CHILD DOES NOT FILE A JOINT RETURN FOR 2011 CHILD'S GI < $9,500 NO ESTIMATED TAXES WERE PAID FOR 2011 AND NO 2010 OVERPAYMENT WAS APPLIED TO 2011 UNDER CHILD'S NAME AND SSN NO FEDERAL WITHHOLDING WAS TAKEN OUT OF CHILD'S INCOME UNDER THE BACKUP WITHHOLDING RULES THE TAXPAYER IS THE PARENT WHOSE RETURN MUST BE USED WHEN APPLYING THE RULES STATED ABOVE |
|
|
HOW DOES A PARENT MAKE THE ELECTION TO REPORT CHILD'S INTEREST AND DIVIDENDS?
|
COMPLETING AND ATTACHING FORM 8814 (PARENT'S ELECTION TO REPORT CHILD'S INTEREST AND DIVIDENDS) AND ATTACHING IT TO THEIR 1040 OR FORM 1040NR
|
|
|
WHEN REPORTING KIDDIE TAX, HOW MUCH IS REPORTED ON PARENT'S RETURN?
|
ONLY THE AMOUNT OF INTEREST, DIVIDENDS, AND CAPITAL GAIN DISTRIBUTIONS OVER $1,900. THE FIRST $950 IS NOT TAXED, WHILE THE NEXT $950 IS TAXED AT 10%. USE PART II OF THE FORM 8814 TO FIGURE THE TAX ON THE $1,900 AS IF IT WAS RECEIVED BY THE PARENT. THE AMOUNT IS CARRIED TO LINE 44 OF THE 1040 OR LINE 42 OF THE 1040NR, AND BOX A FOR FORM 8814 IS CHECKED.
|
|
|
IS A CHILD BORN ON JANUARY 1, 1988 CONSIDERED 23 OR 24 FOR 2011 TAX PURPOSES?
|
24
|
|
|
INVESTMENT INCOME GREATER THAN $1,900 - KIDDIE TAX
|
SUBJECT TO TAX AT THE PARENT'S TAX RATE IF ALL OF THE FOLLOWING CONDITIONS ARE MET:
CHILD WAS UNDER AGE 18 AT THE END OF 2011 OR WAS 18 BUT DID NOT HAVE EI THAT PROVIDED MORE THAN HALF HIS SUPPORT (SAME RULE FOR FULL TIME STUDENT UNDER AGE 24) CHILD'S INVESTMENT INCOME WAS MORE THAN $1,900 CHILD DID NOT FILE A JOINT RETURN CHILD IS REQUIRED TO FILE A 2011 RETURN AT LEAST ONE PARENT WAS ALIVE AT THE END OF 2011 |
|
|
KIDDIE TAX - WHAT IF PARENT WON'T OR CAN'T CHOOSE TO INCLUDE CHILD'S INCOME ON THEIR TAX RETURN?
|
FORM 8615 (TAX FOR CERTAIN CHILDREN WHO HAVE INVESTMENT INCOME OF MORE THAN $1,900) IS USED TO FIGURE THE CHILD'S TAX AND IS ATTACHED TO THE CHILD'S 1040
|
|
|
CALCULATING TAX ON CHILD'S NET INVESTMENT INCOME
|
DETERMINE NET INVESTMENT INCOME IN PART I OF FORM 8615. DETERMINE TENTATIVE TAX AT THE PARENT'S TAX RATE IN PART II. THAT IS THE DIFFERENCE BETWEEN THE TAX ON THE PARENT'S TAXABLE INCOME WITH THE CHILD'S NET INVESTMENT INCOME AND WITHOUT. IF MORE THAN ONE CHILD WITH INVESTMENT INCOME, THE TENTATIVE TAX IS BASED ON THE INCOME OF ALL THE CHILDREN THEN DIVIDED PROPORTIONATELY.
FIGURE CHILD'S TAX IN PART III. THIS IS THE LARGER OF THE CHILD'S SHARE OF THE TENTATIVE TAX BASED ON THE PARENT'S TAX RATE PLUS THE TAX ON THE CHILD'S INCOME IN EXCESS OF NET INVESTMENT INCOME FIGURED AT THE CHILD'S RATE OR THE TAX ON THE CHILD'S INCOME FIGURED AT THE CHILD'S TAX RATE |
|
|
HOW DO YOU DETERMINE THE IMPOSED TAX RATE ON CHILD'S NET INVESTMENT INCOME BASED ON PARENT'S FILING STATUS?
|
MFS - RETURN FOR THE PARENT WITH GREATER TI IS USED
PARENTS ARE MARRIED BUT DO NOT LIVE TOGETHER, AND THE CUSTODIAL PARENT IS CONSIDERED UNMARRIED, THE RETURN FOR THE CUSTODIAL PARENT IS USED. PARENTS ARE DIVORCED OR LEGALLY SEPARATED, AND CUSTODIAL PARENT HAS NOT REMARRIED, CUSTODIAL PARENT'S RETURN IS USED. IF CUSTODIAL PARENT HAS REMARRIED, STEPPARENT IS CONSIDERED OTHER PARENT FOR FOLLOWING THE PRECEDING RULES. NEVER MARRIED BUT LIVED TOGETHER ALL YEAR, PARENT WITH HIGHER TI IS USED. IF THEY DID NOT LIVE TOGETHER ALL YEAR, CUSTODIAL PARENT'S RETURN IS USED. MFJ - JOINT RETURN IS USED |
|
|
DECEDENT TAX RETURN REQUIREMENTS
|
SAME FOUR FACTORS ARE USED FOR DECEASED PERSONS AS INDIVIDUAL PERSONS
|
|
|
WHO FILES FOR A DECEDENT?
|
PERSONAL REPRESENTATIVE OR SPOUSE - WRITE DECEASED WITH NAME AND DATE OF DEATH ON TOP OF RETURN
PERSONAL REPRESENTATIVE WOULD FILL IN AREA FOR SPOUSE'S NAME - EXECUTOR, ADMINISTRATOR, OR ANYONE IN CHARGE OF DECEASED PROPERTY |
|
|
WHAT DOCUMENT SHOULD BE FILED WITH A DECEDENT TAX RETURN FOR A REFUND TO BE RECEIVED?
|
A COPY OF THE CERTIFICATE THAT SHOWS APPOINTMENT BY A COURT.
|
|
|
WHAT IS NOT ACCEPTABLE EVIDENCE OF APPOINTMENT AS A PERSONAL REPRESENTATIVE FOR A DECEASED PERSON?
|
POA OR A COPY OF THE WILL
|
|
|
HOW SHOULD A SPOUSE SIGN A DECEDENT TAX RETURN?
|
WRITE FILING AS A SURVIVING SPOUSE IN SIGNATURE AREA
|
|
|
WHAT FORM NEEDS TO BE FILED WITH A DECEDENT TAX RETURN TO RECEIVE A REFUND (EXCEPT FOR SPOUSES)?
|
FORM 1310 (STATEMENT OF PERSON CLAIMING REFUND DUE A DECEASED TAXPAYER)
|
|
|
ALIEN TAX RETURN - WHICH FORM TO FILE?
|
NONRESIDENT ALIENS FILE FORM 1040-NR AND REPORT CERTAIN INCOME
RESIDENT ALIENS FILE FORM 1040 AS A US CITIZEN WOULD DUAL STATUS ALIENS FILE BOTH |
|
|
WHAT IS A RESIDENT ALIEN?
|
INDIVIDUAL THAT MEETS GREEN CARD TEST OR SUBSTANTIAL PRESENCE TEST.
|
|
|
GREEN CARD TEST
|
INDIVIDUAL IS A RESIDENT OF THE US IF HE IS A LAWFUL PERMANENT RESIDENT AT ANY TIME DURING 2011
|
|
|
SUBSTANTIAL PRESENCE TEST
|
TAXPAYER IS A RESIDENT IF BOTH CONDITIONS ARE MET:
PHYSICALLY PRESENT IN THE US FOR AT LEAST 31 DAYS IN 2011 PHYSICALLY PRESENT IN US FOR AT LEAST 183 DAYS DURING 2009-2011. INCLUDE ALL DAYS OF PHYSICAL PRESENCE IN 2011, 1/3 OF THE DAYS IN 2010, AND 1/6 OF THE DAYS IN 2009 |
|
|
DAYS OF PRESENCE EXCLUSIONS
|
DAYS THE PERSON COMMUTES TO WORK IN THE US FROM A RESIDENCE IN CANADA OR MEXICO IF THEY DO IT ON A REGULAR BASIS
DAYS IN US FOR LESS THAN 24 HOURS WHEN IN TRANSIT BETWEEN TWO PLACES OUTSIDE THE US DAYS PRESENT AS A FOREIGN VESSEL CREW MEMBER DAYS IN US IF MEDICAL CONDITION ARISING IN US KEEPS THEM FROM LEAVING DAYS THE INDIVIDUAL IS EXEMPT |
|
|
EXEMPT INDIVIDUAL FOR DAYS OF PRESENCE TEST
|
FOREIGN GOVERNMENT RELATED PERSON PRESENT WITH AN A OR G VISA
TEACHER/TRAINEE UNDER A J OR Q VISA WHO SUBSTANTIALLY COMPLIES WITH REQUIREMENTS OF VISA A STUDENT IN COMPLIANCE WITH REQUIREMENTS OF THEIR F, J, M, OR Q VISA PROFESSIONAL ATHLETE IN THE US TO COMPETE IN A CHARITABLE SPORTS EVENT |
|
|
FORM 8840 (CLOSER CONNECTION EXCEPTION STATEMENT FOR ALIENS)
|
USED TO CLAIM CLOSER CONNECTION TO A FOREIGN COUNTRY TO AVOID US RESIDENT STATUS
|
|
|
NONRESIDENT ALIEN TAXES
|
SUBJECT TO US INCOME TAX ONLY ON US SOURCE INCOME AND CERTAIN FOREIGN SOURCE INCOME
|
|
|
NONRESIDENT ALIEN FILING REQUIREMENTS
|
NR ENGAGED IN TRADE OR BUSINESS IN US DURING 2011, EVEN IF THEY HAD NO INCOME FROM THAT BUSINESS, NO US INCOME, OR EXEMPT INCOME
NR NOT ENGAGED IN A TRADE OR BUSINESS IN THE US WITH US INCOME ON WHICH THE TAX LIABILITY WAS NOT SATISFIED BY THE WITHHOLDING OF TAX AT THE SOURCE TAXPAYER REPRESENTS A DECEASED PERSON THAT WOULD HAVE HAD TO FILE A 1040NR TAXPAYER REPRESENTS AN ESTATE OR TRUST THAT HAS TO FILE FORM 1040NR |
|
|
NONRESIDENT ALIEN FILING REQUIREMENTS - WHEN ARE THEY NOT REQUIRED TO FILE?
|
NR ONLY US TRADE OR BUSINESS WAS PERSONAL SERVICES AND WAGES < $3,700
NR HAD NO OTHER NEED TO FILE TO CLAIM A REFUND, SATISFY ADDITIONAL WH AT THE SOURCE, OR TO CLAIM EXEMPT INCOME BY TREATY NR WAS A STUDENT, TEACHER, OR TRAINEE WITH AN F, J, M, OR Q VISA AND NO INCOME SUBJECT TO TAX |
|
|
DUAL-STATUS ALIENS
|
US RESIDENT FOR CURRENT BUT NOT PRECEDING YEAR - US RESIDENT ONLY FOR THE PART OF THE YEAR THAT BEGINS ON RESIDENCY STARTING DATE. BEFORE THAT DATE, PERSON WAS A NONRESIDENT ALIEN.
MEETS SUBSTANTIAL PRESENCE TEST, STARTING DATE IS FIRST DAY PRESENT. GREEN CARD TEST, FIRST DAY OF LAWFUL PERM RESIDENCY. MEETS BOTH, FIRST DATE IS EARLIER OF TWO. |
|
|
PERSON NOT MEETING GREEN CARD OR PRESENCE TEST IN 2010 OR 2011 BUT MEETS PRESENCE TEST IN 2012
|
CAN ELECT TO BE TREATED AS A RESIDENT FOR PART OF 2011 IF THEY DID NOT CHOOSE TO DO SO FOR 2010 AND WERE PRESENT IN US FOR AT LEAST 31 DAYS IN A ROW IN 2011 AND PRESENT FOR 75% OF THE DAYS BETWEEN THE FIRST DAY OF THE 31 DAY PERIOD AND THE END OF 2011
|
|
|
WHEN CAN A DUAL STATUS ALIEN CHOOSE TO BE TREATED AS A US RESIDENT FOR ENTIRE YEAR?
|
NR ALIEN AT BEGINNING OF YEAR
RA OR CITIZEN AT END OF YEAR MARRIED TO RA OR US CITIZEN AT END OF YEAR SPOUSE JOINS IN MAKING THE CHOICE |
|
|
US SOURCE INTEREST INCOME
|
INTEREST ON BONDS, NOTES OR OTHER INTEREST-BEARING OBLIGATIONS OF US RESIDENTS OR DOMESTIC CORPS
INTEREST PAID BY A DOMESTIC OR FOREIGN PARTNERSHIP OR FOREIGN CORP ENGAGED IN US TRADE OR BUSINESS AT ANY TIME IN 2011 ORIGINAL ISSUE DISCOUNT INTEREST FROM A STATE, DC, OR US GOVERNMENT |
|
|
US SOURCE DIVIDENDS
|
RECEIVED FROM DOMESTIC CORPS EXCEPT:
IF DOMESTIC CORP ELECTS TO TAKE AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT PART OF DIVIDEND RECEIVED FROM FOREIGN CORP IS US SOURCE INCOME IF 25% OR MORE OF ITS TOTAL GI FOR THE THREE YEARS LEADING UP TO END OF THE TAX YEAR WERE CONNECTED WITH TRADE OR BUSINESS IN US, THEN US SOURCED PORTION IS FOUND USING THIS CALCULATION: FOREIGN CORP GI CONNECTED WITH US FOR 3 YEAR PERIOD/FOREIGN CORP GI FROM ALL SOURCES FOR THAT PERIOD |
|
|
US SOURCE PERSONAL SERVICE INCOME
|
ALL WAGES AND COMPENSATION FOR SERVICES PERFORMED IN US
ALLOCATE IF SERVICES PERFORMED IN MORE THAN ONE COUNTRY |
|
|
US SOURCE FRINGE BENEFIT INCOME
|
SOURCED ON A GEOGRAPHICAL BASIS AND INCLUDES HOUSING, EDUCATION, TRANSPORTATION, TAX REIMBURSEMENT, HAZARD PAY, MOVING EXPENSE REIMBURSEMENT
|
|
|
US SOURCE TRANSPORTATION INCOME
|
ALL INCOME FROM TRANSPORTATION THAT BEGINS AND ENDS IN US
50% IF BEGINS OR ENDS IN US COMPENSATION TO A CREW MEMBER OF A FOREIGN VESSEL IS NOT US INCOME |
|
|
US SOURCE SCHOLARSHIPS, GRANTS, PRIZES, AND AWARDS
|
RESIDENCE OF THE PAYER UNLESS DESIGNATED AS INTERNATIONAL ORGANIZATIONS IMMUNITIES ACT - THEN IT IS FOREIGN
|
|
|
US SOURCE PENSIONS AND ANNUITIES
|
PENSION FROM A DOMESTIC TRUST FOR SERVICES PERFORMED IN AND OUT OF THE US IS DIVIDED BETWEEN BOTH ATTRIBUTABLE TO EARNINGS OF THE TRUST AND EMPLOYER CONTRIBUTIONS MADE FOR SERVICES PERFORMED IN US
|
|
|
US SOURCE RENTS AND ROYALTIES
|
PROPERTY IN US INCLUDING USE OF INTANGIBLE US PROPERTY (PATENTS, COPYRIGHTS, FRANCHISES, ETC)
|
|
|
US SOURCE REAL PROPERTY
|
PROPERTY LOCATED IN US
SOLD TO FOREIGN OR BOUGHT FROM FOREIGN IS PARTIAL US INCOME |
|
|
US SOURCE PERSONAL PROPERTY
|
US IF INDIVIDUAL HAS US TAX HOME
|
|
|
NR EXCLUSION FROM INCOME
|
US SOURCE INTEREST INCOME NOT CONNECTED WITH BUSINESS OR TRADE IF IT IS FROM DEPOSITS WITH PERSONS IN THE BANKING BUSINESS, DEPOSITS WITH MUTUAL BANKS, COOP BANKS, CREDIT UNIONS, ETC., AND AMOUNTS HELD BY INSURANCE COMPANY UNDER AGREEMENT TO PAY INTEREST ON THEM
INTEREST ON OBLIGATIONS OF A STATE OR DC OR US POSSESSION PORTFOLIO INTEREST ON OBLIGATIONS ISSUED AFTER JULY 18, 1984 DIVIDEND INCOME IS EXEMPT FROM 30% TAX: US SOURCE DIVS FROM FC INTEREST-RELATED DIVS FROM MUTUAL FUND STCG DIVS FROM MUTUAL FUND OR INVESTMENT CO. INCOME FOR PERSONAL SERVICES IF ALL CONDITIONS ARE MET: PERFORMS SVCS AS EE OF NR INDIVIDUAL, FC, NOT ENGAGED WITH US, OR WORKS IN AN OFFICE MAINTAINED OUTSIDE THE US PERFORMS SERVICES LESS THAN 90 DAYS PAY IS LESS THAN $3000 |
|
|
OTHER FILING REQUIREMENT SITUATIONS
|
CHURCH EMPLOYEE WITH WAGES > $108.28
HSA, MSA, OR MEDICARE ADVANTAGE MSA DISTRIBUTIONS RECEIVED SELF-EMPLOYMENT EARNINGS > $400 OWES ANY SPECIAL TAXES: FORM 5329 (ADDT. TAXES ON QUALIFIED PLANS AND OTHER TAX-FAVORED ACCOUNTS), UNLESS THERE IS NO OTHER FILING REQUIREMENT, THEN FILE ONLY FORM 5329 FOR THE FOLLOWING: ADDITIONAL TAX ON DISTRIBUTIONS FROM A QUALIFIED PLAN, IRA, ROTH IRA, COVERDELL ESA, OR QTP ADDTL. TAX ON EXCESS CONTRIBUTIONS TO IRA, ROTH IRA, HSA, ARCHER MSA, AND COVERDELL ESA ADDITIONAL TAX ON EXCESS ACCUMULATIONS OF QUALIFIED RETIREMENT PLANS , INCLUDING IRAS AMT HOUSEHOLD EMPLOYMENT TAXES - IF NO OTHER FILING REQUIREMENT, FILE ONLY SCHEDULE H FIRST-TIME HOMEBUYER CREDIT REPAYMENT SS AND MED ON UNREPORTED TIPS OR WAGES RECEIVED FROM AN EMPLOYER THAT DID NOT WITHHOLD THESE TAXES. ATTACH FORM 4137 (SS/MED ON UNREPORTED TIP INCOME) OR FORM 8919 (UNCOLLECTED SS/MED TAXES ON WAGES) TO 1040 NUMEROUS WRITE IN TAXES INCLUDING UNCOLLECTED SS/MED OR RRTA TAX ON TIPS REPORTED TO THE EMPLOYER OR ON GROU |
|
|
HOW TO OBTAIN A TIN
|
FILE FORM W-7, APPLICATION FOR A US TIN
|
|
|
HOW TO OBTAIN AN ATIN FOR A PENDING ADOPTION
|
FORM W-7A, APPLICATION FOR TIN FOR PENDING US ADOPTIONS
|
|
|
WHAT IS A LIMITATION OF A TIN OR AN ATIN?
|
THEY CANNOT BE USED TO CLAIM THE EARNED INCOME CREDIT - SSNS ARE REQUIRED
|
|
|
DETERMINING MARRIED STATUS
|
MARRIED FOR THE WHOLE YEAR IF ONE OF THE FOLLOWING APPLY:
MARRIED AND LIVING TOGETHER AS HUSBAND AND WIFE LIVING TOGETHER IN A COMMON LAW MARRIAGE THAT IS RECOGNIZED IN THE STATE WHERE THEY NOW LIVE OR WHERE THE COMMON LAW MARRIAGE BEGAN MARRIED AND LIVING APART, BUT NOT LEGALLY SEPARATED UNDER A DECREE OF DIVORCE OR SEPARATE MAINTENANCE SEPARATED UNDER AN INTERLOCUTORY (NOT FINAL) DECREE OF DIVORCE |
|
|
WHEN A MARRIAGE ANNULMENT OCCURS
|
ANY YEARS IN WHICH TAXPAYERS ELECTED MFJ SHOULD BE AMENDED AS LEGALLY, MARRIAGE NEVER EXISTED
|
|
|
MARRIED FILING JOINTLY - VALID SIGNATURES
|
DECEASED SPOUSE MUST BE SIGNED BY SPOUSE OR EXECUTOR OR ADMINISTRATOR
INJURY OR DISEASE PREVENTS ONE SPOUSE FROM SIGNING, THE TAXPAYER CAN SIGN FOR THEM WITH PROPER NOTATION AND A STATEMENT ATTACHED TO THE RETURN SPOUSE IS SERVING IN A COMBAT ZONE, FILING SPOUSE CAN SIGN AND ATTACH A STATEMENT ANY OTHER REASON AND THE SPOUSE SIGNING MUST INCLUDE A POA |
|
|
FORM 8857, REQUEST FOR INNOCENT SPOUSE RELIEF
|
USED TO RELIEVE SPOUSE OF JOINT LIABILITY FOR ITEMS OF THE OTHER SPOUSE'S THAT WERE REPORTED INCORRECTLY
|
|
|
MARRIED FILING SEPARATELY - CAN AN INDIVIDUAL CLAIM AN EXEMPTION FOR THEIR SPOUSE?
|
ONLY IF THE SPOUSE HAD NO GROSS INCOME, IS NOT FILING A RETURN, AND WAS NOT A DEPENDENT OF SOMEONE ELSE
|
|
|
WHAT CREDITS ARE INDIVIDUALS MFS INELIGIBLE TO TAKE?
|
CHILD AND DEPENDENT CARE EXPENSES AND AMOUNT EXCLUDABLE UNDER AN EMPLOYER DEPENDENT CARE PLAN IS $2,500
EARNED INCOME CREDIT EXCLUSION OR CREDIT FOR ADOPTION EXPENSES EDUCATION CREDITS DEDUCTION FOR STUDENT LOAN INTEREST TUITION AND FEES DEDUCTION EXCLUDE INTEREST INCOME FROM US SAVINGS BONDS USED FOR HIGHER EDUCATION |
|
|
IF MFS AND INDIVIDUAL LIVED WITH THE SPOUSE AT ANY TIME DURING 2011 - WHAT SPECIAL RULES APPLY?
|
CREDIT FOR ELDERLY OR DISABLED CANNOT BE CLAIMED
UP TO 85% OF SS BENEFITS ARE INCLUDED IN INCOME SPECIAL $25,000 LOSS ALLOWANCE FOR RENTAL ACTIVITY IS LOST ENTIRELY |
|
|
THESE CREDITS OR DEDUCTIONS ARE REDUCED AT INCOME LEVELS THAT ARE HALF OF THOSE ALLOWED FOR A MFJ RETURN - MFS
|
CHILD TAX CREDIT
RETIREMENT SAVINGS CONTRIBUTION CREDIT EXEMPTION AMOUNT FOR DETERMINING ALTERNATIVE MINIMUM TAX |
|
|
THE FOLLOWING CREDITS OR DEDUCTIONS ARE HALF THOSE ALLOWED FOR MFJ - MFS
|
CAPITAL LOSS IS LIMITED TO $1,500
SPECIAL ALLOWANCE FOR RENTAL ACTIVITY LOSSES IS LIMITED TO $12,500 IF LIVED APART FROM SPOUSE FOR ENTIRE YEAR FIRST TIME HOMEBUYER CREDIT IS LIMITED TO $4,000 (OR $3,250 FOR LONG-TIME RESIDENTS) |
|
|
CAN MFJ AMEND TO MFS AND VICE VERSA?
|
MFS CAN AMEND TO FILE MFJ ANY TIME WITHIN 3 YEARS FROM THE DUE DATE OF SEPARATE RETURNS, NOT INCLUDING EXTENSIONS.
MFJ CANNOT AMEND TO MFS AFTER THE DUE DATE OF THE RETURN |
|
|
HEAD OF HOUSEHOLD REQUIREMENTS
|
UNMARRIED OR "CONSIDERED UNMARRIED" ON 12/31/11
A QUALIFYING PERSON LIVED WITH THE TAXPAYER IN THE HOME FOR MORE THAN HALF THE YEAR. IF A DEPENDENT PARENT, THEY DO NOT HAVE TO LIVE WITH THE TAXPAYER. TAXPAYER PAID MORE THAN HALF THE COST OF KEEPING UP A HOME FOR THE TAX YEAR. FOR DEPENDENT PARENT, TAXPAYER MUST HAVE PAID MORE THAN HALF THE COST OF KEEPING UP THE PARENT'S HOME. |
|
|
UNMARRIED STATUS
|
LEGALLY SEPARATED UNDER A DECREE OF DIVORCE OR OF SEPARATE MAINTENANCE
|
|
|
"CONSIDERED UNMARRIED"
|
FILES A SEPARATE RETURN
PAYS MORE THAN HALF THE COST OF KEEPING UP THE HOME FOR THE YEAR SPOUSE DID NOT LIVE IN THE HOME DURING THE LAST 6 MONTHS OF THE YEAR HOME WAS THE MAIN HOME OF THE CHILD, STEPCHILD, OR FOSTER CHILD FOR MORE THAN HALF THE YEAR MUST BE ABLE TO CLAIM AN EXEMPTION FOR THE CHILD. EVEN IF TAXPAYER RELEASES THE EXEMPTION TO THE NONCUSTODIAL PARENT. SPOUSE IS A NR ALIEN AT ANY TIME DURING THE YEAR AND THEY DO NOT ELECT TO BE TREATED AS A RESIDENT FOR THE ENTIRE YEAR. |
|
|
CAN A NONRESIDENT ALIEN FILE AS HEAD OF HOUSEHOLD
|
NO
|
|
|
QUALIFYING CHILD
|
SON, DAUGHTER, GRANDCHILD
|
|
|
QUALIFYING RELATIVE
|
FATHER, MOTHER
|
|
|
QUALIFYING RELATIVE OTHER THAN FATHER OR MOTHER
|
GRANDPARENT, BROTHER, SISTER
|
|
|
HOH - QUALIFYING CHILD
|
QC AND SINGLE
QC AND MARRIED AND TAXPAYER CAN CLAIM EXEMPTION FOR HIM/HER |
|
|
HOH - QUALIFYING RELATIVE
|
QR AND TAXPAYER CAN CLAIM EXEMPTION FOR HIM/HER
|
|
|
HOH - QUALIFYING RELATIVE OTHER THAN FATHER OR MOTHER
|
HE OR SHE IS RELATED, LIVED WITH THE TAXPAYER FOR MORE THAN HALF THE YEAR, AND TAXPAYER CAN CLAIM AN EXEMPTION FOR HIM/HER
|
|
|
COSTS OF KEEPING UP A HOME
|
RENT
MORTGAGE INTEREST PROPERTY TAXES INSURANCE ON THE HOME REPAIRS UTILITIES FOOD EATEN IN THE HOME OTHER EXPENSES RELATED SPECIFICALLY TO THE HOME |
|
|
COSTS OF KEEPING UP A HOME THAT ARE NOT INCLUDED IN HOH CALCULATION
|
CLOTHING
EDUCATION MEDICAL CARE VACATIONS LIFE INSURANCE TRANSPORTATION RENTAL VALUE OF HOME OWNED VALUE OF TAXPAYER SERVICES |
|
|
KIDNAPPED CHILD
|
HOH OR QUALIFYING WIDOWER WITH DEPENDENT CHILD IS AVAILABLE EVEN IF CHILD IS KIDNAPPED, PROVIDED:
LAW ENFORCEMENT PRESUME THAT KIDNAPPER IS NOT A FAMILY MEMBER IN THE YEAR OF KIDNAPPING, CHILD LIVED WITH INDIVIDUAL FOR MORE THAN HALF OF THE PART OF THE YEAR BEFORE KIDNAPPING THE INDIVIDUAL WOULD HAVE QUALIFIED FOR THIS STATUS IF CHILD HAD NOT BEEN KIDNAPPED |
|
|
LAST YEAR OF KIDNAPPED CHILD TREATMENT
|
THE YEAR THAT A DETERMINATION IS MADE THAT CHILD IS DEAD
THE YEAR THE CHILD WOULD BE 18 |
|
|
STANDARD DEDUCTION FOR 2011
|
SINGLE - $5,800
HOH - $8,500 MFJ - $11,600 QW - $11,600 MFS - $5,800 |
|
|
ADDITIONAL STANDARD DEDUCTION FOR 65+ OR BLIND
|
SINGLE, HOH - $1,450
MFJ, QW, MFS - $1,150 |
|
|
PARTIALLY BLIND STATUS
|
MUST GET A CERTIFIED STATEMENT FROM THE EYE DOCTOR OR REGISTERED OPTOMETRIST STATING THAT THE TAXPAYER CANNOT SEE BETTER THAN 20/200 IN THE BETTER EYE WITH GLASSES OR CONTACT LENSES, OR THE TAXPAYER'S FIELD OF VISION IS NOT MORE THAN 20 DEGREES
|
|
|
DEPENDENT STANDARD DEDUCTION
|
GENERALLY LIMITED TO $950 OR EI PLUS $300 (NOT MORE THAN $5,800)
|
|
|
NO STANDARD DEDUCTION
|
MFS AND SPOUSE ITEMIZES (UNLESS HOH)
FILING A TAX RETURN FOR A SHORT YEAR BECAUSE OF CHANGE IN ANNUAL ACCOUNTING PERIOD NONRESIDENT ALIEN DUAL-STATUS ALIENS |
|
|
PERSONAL EXEMPTION
|
2011 AMOUNT IS $3,700
|
|
|
WHO CANNOT CLAIM A PERSONAL EXEMPTION?
|
IF ANOTHER PERSON CAN CLAIM T/P AS A DEPENDENT, T/P MAY NOT TAKE EXEMPTION, EVEN IF OTHER PERSON DOES NOT CLAIM THEM AS A DEPENDENT
|
|
|
IS A NRA ENTITLED TO A PERSONAL EXEMPTION?
|
YES. RESIDENTS OF MEXICO, CANADA, S. KOREA, US NATIONALS AND STUDENT/BUSINESS APPRENTICES FROM INDIA CAN ALSO CLAIM A PERSONAL EXEMPTION FOR A SPOUSE IF THAT SPOUSE HAD NO INCOME FOR US AND IS NOT CLAIMED AS A DEPENDENT BY SOMEONE ELSE.
|
|
|
CAN DUAL-STATUS ALIENS TAKE A PERSONAL EXEMPTION?
|
EXEMPTIONS FOR SPOUSES AND DEPENDENTS CANNOT BE MORE THAN THE TAXABLE INCOME FOR PERIOD OF RESIDENCE
|
|
|
TEST FOR DEPENDENCY EXEMPTION
|
CANNOT BE A DEPENDENT OF SOMEONE ELSE
JOINT RETURN TEST. CANNOT CLAIM A MARRIED PERSON UNLESS MARRIED PERSON AND SPOUSE FILE MFJ ONLY TO CLAIM A REFUND AND NO TAX LIABILITY EXISTS. CITIZEN OR RESIDENT TEST |
|
|
QUALIFYING CHILD TESTS
|
RELATIONSHIP
AGE RESIDENCY SUPPORT SPECIAL TEST FOR QC OF MORE THAN ONE PERSON |
|
|
QC RELATIONSHIP
|
SON
DAUGHTER STEPCHILD ELIGIBLE FOSTER CHILD DESCENDENT OF ANY OF THE ABOVE BROTHER SISTER HALF-BROTHER/SISTER STEPBROTHER/SISTER DESCENDENT OF ANY OF THE ABOVE |
|
|
QC AGE TEST
|
UNDER 19 AND YOUNGER THAN T/P
FULL TIME STUDENT UNDER 24 AND YOUNGER THAN T/P PERMANENTLY AND TOTALLY DISABLED REGARDLESS OF AGE |
|
|
QC RESIDENCY TEST
|
MUST LIVE WITH T/P > 1/2 YEAR
HOME DOES NOT HAVE TO BE TRADITIONAL NON-PERMANENT TEMPORARY ABSENCE IS SAME AS OCCUPANCY IN THE HOME |
|
|
QC SPECIAL RULES TEST
|
APPLY TO DIVORCED/SEPARATED/NEVER MARRIED PARENTS
CUSTODIAL PARENT - WHOEVER CHILD SPENDS MOST NIGHTS AT NEITHER IF EMANCIPATED COUNTS AS A NIGHT IF IN PARENT'S HOME OR WITH PARENT IF ON A SLEEPOVER, COUNTS TOWARD PARENT THAT WOULD HAVE HAD THEM IF PARENT HAS A NIGHT JOB WHICH PREVENTS CHILD FROM SLEEPING NIGHTS BUT LIVES MORE DAYS WITH THAT PARENT, THAT PARENT IS CUSTODIAL PARENT IF EQUAL NIGHTS, PARENT WITH HIGHER AGI GETS CHILD |
|
|
NONCUSTODIAL PARENT
|
QC IF ALL ARE TRUE:
PARENTS ARE LEGALLY APART AND LIVED APART FOR LAST 6 MTHS OF YEAR CHILD RECEIVED > 1/2 SUPPORT FROM PARENTS CHILD IS IN CUSTODY OF ONE OR TWO PARENTS FOR > 1/2 YR EFFECTIVE DATE OF DECREE DETERMINES WHAT DOCUMENT IS NEEDED FOR NONCUSTODIAL PARENT |
|
|
NONCUSTODIAL PARENT - DOCUMENTS NEEDED
|
POST 2008 DECREE: FORM 8332, RELEASE/REVOCATION OF RELEASE OF CLAIM TO EXEMPTION FOR CHILD BY CUSTODIAL PARENT
POST 1984 AND PRE 2009 DECREE: PAGES FROM DECREE MAY BE ATTACHED TO 1040 IN LIEU OF FORM 8332 PRE 1985: CAN STATE THAT NONCUSTODIAL PARENT CAN CLAIM CHILD |
|
|
SUPPORT TEST FOR QC
|
CHILD PROVIDED < 1/2 OF OWN SUPPORT
SCHOLARSHIP NOT TAKEN INTO ACCOUNT SURVIVING CHILD'S SS BENEFITS ARE CHILD'S STUDENT LOANS PAID BACK BY STUDENT ARE CHILD'S |
|
|
QUALIFYING PERSON OF MORE THAN ONE T/P TEST
|
T/P THAT CLAIMS QC GETS ALL:
EXEMPTION CHILD TAX CREDIT HOH CREDIT FOR CHILD/DEPENDENT CARE EXPENSES EXCLUSION FROM INCOME FOR DEPENDENT CARE BENEFITS EARNED INCOME TAX CREDIT IF PARENTS CAN CLAIM QC BUT DON'T, SOMEONE ELSE CAN IF THEY HAVE A HIGHER AGI THAN BOTH PARENTS |
|
|
QC OF NONCUSTODIAL PARENT LIMITATIONS
|
NONCUSTODIAL PARENT CANNOT CLAIM:
HOH CREDIT FOR CHILD/DEP CARE EXP EXCLUSION FOR DEP CARE BEN. EITC |
|
|
TIE BREAKER RULES FOR QC
|
PARENT TRUMPS ANYONE ELSE
PARENT THAT LIVED WITH CHILD MOST PARENT WITH HIGHEST AGI IF THEY SPENT EQUAL TIME IF NEITHER ARE PARENTS, HIGHEST AGI WINS |
|
|
QUALIFYING RELATIVE TESTS
|
NOT A QUALIFYING CHILD
MEMBER OF HOUSEHOLD OR RELATIONSHIP TEST GROSS INCOME TEST SUPPORT TEST |
|
|
NOT A QC TEST FOR QR
|
NOT QR IF QC OF ANYONE
QC CAN BE QR IF THE PARENT IS NOT REQUIRED TO FILE A RETURN AND EITHER DOESN'T FILE OR FILES ONLY FOR A REFUND |
|
|
MEMBER OF HOUSEHOLD/RELATIONSHIP TEST FOR QR
|
LIVES WITH T/P ALL YEAR OR RELATED TO T/P IN THESE WAYS:
CHILD, STEPCHILD, ELIGIBLE FOSTER CHILD, OR DESCENDANT SIBLING, STEPSIBLING, HALF-SIBLING PARENT, GRANDPARENT, OR DIRECT ANCESTOR (NOT FOSTER) STEPPARENT NIECE/NEPHEW AUNT/UNCLE CHILD-IN-LAW, PARENT-IN-LAW, SIBLING-IN-LAW |
|
|
CAN A COUSIN BE A QR?
|
YES ONLY IF THEY LIVE IN HOME ENTIRE YEAR
|
|
|
DO DEPENDENCY RELATIONSHIPS ESTABLISHED BY MARRIAGE END AT DEATH OR DIVORCE?
|
NO
|
|
|
GROSS INCOME TEST - QR
|
MUST BE LESS THAN $3,700
|
|
|
SUPPORT TEST - QR
|
T/P MUST PROVIDE > 1/2 SUPPORT
SUPPORT INCLUDES TAX EXEMPT INCOME, SAVINGS AND LOANS USED FOR SUPPORT OWN FUNDS NOT USED FOR SUPPORT ARE NOT SUPPORT FOSTER CARE PAYMENTS ARE SUPPORT PROVIDED BY AGENCY IF TWO T/P COULD TAKE EXEMPTION EXCEPT FOR SUPPORT TEST, BUT TOGETHER PROVIDE > 1/2 SUPPORT, MULTIPLE SUPPORT AGREEMENT IS USED TO ALLOW ONE PERSON TO CLAIM EXEMPTION |
|
|
DUE DATES FOR 1040
|
APRIL 15 FOR CALENDAR YEAR T/P
15TH OF FOURTH MONTH AFTER YEAR END FOR FISCAL YEAR T/P |
|
|
AUTOMATIC SIX MONTH EXTENSION
|
USING E-FILE PROGRAM OR PAPER FORM 4868 BY DUE DATE OF RETURN
|
|
|
EXTENSION FOR INDIVIDUALS LIVING ABROAD
|
AUTO 2 MTH EXT. IF:
US CITIZEN/RESIDENT ON DUE DATE OF RETURN, T/P IS LIVING OUT OF US AND PUERTO RICO OR IN MILITARY/NAVAL SERVICE OUTSIDE OF US AND P.RICO |
|
|
INDIVIDUALS SERVING IN A COMBAT ZONE
|
DEADLINE FOR FILING AUTO EXTENDED
APPLIES TO MEMBERS OF ARMED FORCES, MERCHANT MARINES FOR DEPT. OF DEFENSE, RED CROSS, ACCREDITED CORRESPONDENTS AND CIVILIANS UNDER DIRECTION OF ARMED FORCES |
|
|
WHAT IS A COMBAT ZONE?
|
PRESIDENT DESIGNATED WHERE US IS ENGAGED IN COMBAT
|
|
|
2011 COMBAT ZONES
|
AFGHANISTAN, EFFECTIVE 9/19/01
PAKISTAN, TAJIKISTAN, JORDAN, UZBEKISTAN, AND KYRGYZSTAN AS OF 12/14/01 KOSOVO AREA AS OF 3/24/99 - INCLUDES FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA/MONTENEGRO), ALBANIA, THE ADRIATIC SEA, AND THE IONIAN SEA NORTH OF THE 39TH PARALLEL PERSIAN GULF AREA, AS OF -1/17/91 - INCLUDES PERSIAN GULF, RED SEA, GULF OF OMAN, GULF OF ADEN, TOTAL LAND AREAS OF IRAQ, KUWAIT, SAUDI ARABIA, OMAN, BAHRAIN, QATAR, AND THE UNITED ARAB EMIRATES, AND PART OF THE ARABIAN SEA |
|
|
COMBAT ZONE EXTENSION TIME
|
180 DAYS AFTER THE LATER OF THE LAST DAY IN A COMBAT ZONE OR THE LAST DAY OF ANY CONTINUOUS QUALIFIED HOSPITALIZATION FOR INJURY FROM SERVICE IN THE COMBAT ZONE
|
|
|
DUE DATE FOR FORM 1040NR AND 1040NR-EZ
|
NR EARNED WAGES SUBJECT TO US TAX: SAME AS 1040
WITHOUT WAGES SUBJECT TO US TAX: CALENDAR YEAR JUNE 15 OR 15TH DAY OF 6TH MONTH AFTER YEAR END FOR FISCAL YEAR |
|
|
DECEDENT TAX RETURN DUE DATE
|
SAME AS IF DECEDENT WAS ALIVE
|
|
|
LATE FILE AND LATE PAY PENALTIES
|
LATE FILING IS 5% FOR EACH MONTH/PART OF MONTH BUT NO MORE THAN 25% - BASED ON UNPAID TAX AT DUE DATE
LATE PAYMENT PENALTY IS .5% OF UNPAID TAXES PER MONTH/PART OF MONTH AFTER DUE DATE IF BOTH PENALTIES ARE COMBINED, 5% FAILURE TO FILE IS REDUCED BY FAILURE TO PAY RATE |
|
|
EMPLOYEE COMPENSATION
|
WAGES
SALARIES COMMISSIONS FEES TIPS FRINGE BENEFITS STOCK OPTIONS |
|
|
TIPS - RECORDING
|
CAN BE RECORDED ON FORM 4070A, EMPLOYEES DAILY RECORD OF TIPS
|
|
|
TIP REPORTING TO EMPLOYER
|
CASH, CHECK, CREDIT CARD TIPS BY 10TH OF EACH MONTH
REQUIRED FOR EVERY MONTH THAT TIPS > $20 |
|
|
WHAT IF EMPLOYEE'S CHECK CANNOT COVER FICA?
|
REPORTED ON W-2, BOX 12, CODES A AND B
REPORTED ON 1040, LINE 60, IDENTIFIED AS UT |
|
|
WHAT TIPS ARE INCLUDED ON 1040, LINE 7?
|
CASH AND NONCASH TIPS NOT REPORTED TO THE EMPLOYER. TIPS REPORTED TO EMPLOYER WILL BE ON W-2.
|
|
|
ALLOCATED TIPS
|
THE AMOUNT AN EMPLOYEE IS DEEMED TO HAVE RECEIVED BUT NOT REPORTED WHILE EMPLOYED AT A LARGE FOOD/BEVERAGE ESTABLISHMENT, SHOWN ON W-2
TAXABLE UNLESS EMPLOYEE HAS PROOF THAT THEY DID NOT RECEIVE THEM |
|
|
FORM 4137, SS/MED TAX ON UNREPORTED TIP INCOME
|
INCLUDES ALL TIPS REPORTED TO THE EMPLOYER, ALL UNREPORTED TIPS, AND ALL ALLOCATED TIPS. SS/MED IS CALCULATED ON AMOUNTS FOR WHICH THERE WAS NO WITHHOLDING.
|
|
|
EXPENSE REIMBURSEMENT
|
CAN BE EXCLUDED FROM WAGES IF PROVIDED UNDER AN ACCOUNTABLE PLAN OF THE EMPLOYER.
|
|
|
FRINGE BENEFITS
|
TAXABLE AT FMV UNLESS EXCLUDED BY LAW OR PAID FOR BY T/P
|
|
|
CAFETERIA PLAN DEFINITION
|
A FLEX SPENDING ARRANGEMENT, WRITTEN PLAN THAT ALLOWS EE TO CHOOSE CASH OR TAXABLE FRINGE BENEFITS INSTEAD OF CERTAIN EXCLUDABLE BENEFITS.
|
|
|
QUALIFIED BENEFITS OF A CAFETERIA PLAN
|
ACCIDENT AND HEALTH BENEFITS
ADOPTION ASSISTANCE DEPENDENT CARE ASSISTANCE GROUP-TERM LIFE INSURANCE HSA - DISTRIBUTIONS FROM HSA CAN BE USED TO PAY ELIGIBLE LONG-TERM CARE INSURANCE PREMIUMS OR CARE SERVICES |
|
|
NON-QUALIFIED BENEFITS OF A CAFETERIA PLAN
|
ARCHER MSA
ATHLETIC FACILITIES DE MINIMUS BENEFITS EDUCATIONAL ASSISTANCE EMPLOYEE DISCOUNTS LODGING ON ER'S PREMISES MEALS MOVING EXP. REIMB. NO-ADDT.L-COST SERVICES TRANSPORTATION BENEFITS TUITION REDUCTION WORKING CONDITINON FRINGE BENEFITS |
|
|
EMPLOYEES FOR CAFETERIA PLANS
|
COMMON LAW EE (NOT A 2% S-CORP SHAREHOLDER)
FULL-TIME LIFE INSURANCE AGENCY WHO IS A CURRENT STATUTORY EE LEASED EE WORKING ON FT BASIS FOR AT LEAST 1 YEAR UNDER ER CONTROL |
|
|
ARE $ FROM ER FOR LONG-TERM CARE INCLUDED IN INCOME?
|
NO, BUT IF MADE THRU A FLEXIBLE SPENDING OR CAFE PLAN ARE.
|
|
|
ER CONTRIBUTIONS TO ARCHER MSA
|
NOT INCOME. REPORTED IN BOX 12 OF W-2, CODE R.
REPORTED ON FORM 8853, ARCHER MSAS AND LONG-TERM CARE INSURANCE CONTRACTS |
|
|
HEALTH FSA
|
QUALIFIES AS AN ACCIDENT/HEALTH PLAN, THE SALARY REDUCTION AND REIMBURSEMENTS OF MEDICAL EXPENSES ARE NOT INCOME.
HEALTH FSA CAN MAKE QUALIFIED HSA DISTRIBUTION. DIRECT TRANSFER TO T/P HSA TRUSTEE BY ER. |
|
|
HEALTH REIMBURSEMENT ARRANGEMENT (HRA)
|
ER PROVIDED - NOT INCOME
HRA CAN MAKE QUALIFIED HSA DISTRIBUTIONS. |
|
|
CONTRIBUTIONS TO AN HSA BY T/P
|
T/P, ER, FAMILY MEMBER CAN MAKE CONTRIBUTIONS WHICH ARE DEDUCTIBLE. IF MADE BY ER, REPORTED IN BOX 12, CODE W. REPORTED ON FORM 8889, HSAS.
ONE-TIME DISTRIBUTION FROM AN IRA TO AN HSA CAN BE EXCLUDED FROM INCOME. |
|
|
ACHIEVEMENT AWARDS
|
EXCLUDED FROM EE WAGES IF COST IS NOT MORE THAN ER CAN DEDUCT
|
|
|
EXCLUDABLE AMOUNT OF ACHIEVEMENT AWARDS
|
$1,600 UNDER QUALIFIED PLAN
$400 UNDER NONQUALIFIED PLAN |
|
|
QUALIFIED PLAN - ACHIEVEMENT AWARDS
|
PART OF AN ESTABLISHED WRITTEN PLAN NOT FAVORING HIGHLY PAID EES
HIGHLY PAID EE IS 5% OWNER IN 2010 OR 2011, EARNED > $110,000 AND IF ER MADE THE TOP-PAID GROUP ELECTION, WAS AMONG THE 20% TOP PAID EES |
|
|
WHAT IS AN ACHIEVEMENT AWARD?
|
GIVEN FOR LENGTH OF SERVICE (OVER 5 YEARS), SAFETY ACHIEVEMENT (NOT TO MGR, ADMIN, CLERICAL, PROFESSIONAL) UNLESS > 10% OF EES HAVE RECEIVED AWARD DURING TAX YEAR
AWARDED AT PRESENTATION |
|
|
ADOPTION ASSISTANCE
|
$13,360 PAID BY ER IS NOT INCOME
REPORTED IN BOX 12, CODE T TAXABLE FOR SS/MED REPORTED ON FORM 8839, QUALIFIED ADOPTION EXPENSES |
|
|
ATHLETIC FACILITIES
|
NOT IN INCOME IF ER OWNED AND USED BY EES AND THEIR FAMILIES
|
|
|
DE MINIMIS BENEFITS
|
NOT IN INCOME - INCLUDES PERSONAL USE OF OFFICE EQUIPMENT, SMALL HOLIDAY GIFT (NOT CASH), OCCASIONAL PARTIES
|
|
|
DEPENDENT CARE BENEFITS
|
ER PROVIDED NOT INCOME
REPORTED ON FORM 2441, CHILD AND DEPENDENT CARE EXPENSES. AMOUNT IS LESSER OF: TOTAL BENEFIT RECEIVED, TOTAL EXPENSES INCURRED, EE EI, SPOUSE'S EI, OR $5,000 ($2,500 IF MFS) |
|
|
EDUCATIONAL ASSISTANCE
|
UP TO $5,250 OF ER PROVIDED IS NOT INCOME
|
|
|
EE DISCOUNT
|
NOT DISOUNTS ON REAL PROPERTY OR INVESTMENT PROPERTY. LIMITED TO RETAIL PRICE X LIMITS: ER GROSS PROFIT % X RETAIL OR 20% OF RETAIL
|
|
|
EE STOCK OPTION
|
INCENTIVE STOCK OPTION
EE STOCK PURCHASE PLAN OPTIONS NONSTATUTORY STOCK OPTIONS |
|
|
ISO AND ESPP - INCLUSIONS
|
ON THE EXERCISE OF AN ISO, T/P MUST INCLUDE AS AN ADJ. IN FIGURING AMT INCOME THE AMOUNT BY WHICH FMV EXCEEDS OPTION PRICE
|
|
|
DISPOSITION OF OPTION STOCK
|
TAXABLE INCOME/DEDUCTIBLE LOSS - GENERALLY CG OR CL
UNLESS HOLDING PERIOD IS NOT MET OR OPTION GRANTED UNDER A DISCOUNT |
|
|
HOLDING PERIOD REQUIREMENT STOCK OPTIONS
|
T/P DOES NOT SELL STOCK WITHIN ONE YEAR AFTER TRANSFERRED TO THEM, OR TWO YEARS AFTER OPTION GRANTED
|
|
|
BASIS OF ISO STOCK
|
AMOUNT PAID
|
|
|
ISO STOCK WHEN HOLDING PERIOD IS NOT MET
|
GAIN IS ORDINARY INCOME UP TO AMOUNT BY WHICH FMV WHEN EXERCISED EXCEEDS OPTION PRICE. EXCESS IS CAPITAL GAIN OR LOSS.
|
|
|
STOCK ACQUIRED THROUGH AN ESPP
|
BASIS IS OPTION PRICE AT TIME OF EXERCISE. HOLDING PERIOD BEGINS DAY AFTER EXERCISE. IF GRANTED AT A DISCOUNT, AMT. OVER FMV IS COMPENSATION, EXCESS IS CAPITAL GAIN.
|
|
|
NONQUALIFIED STOCK OPTION
|
IF NQSO HAS FMV, OPTION IS INCLUDED IN INCOME
IF NQSO HAS NO FMV, NOT IN INCOME UNTIL EXERCISED/TRANSFERRED. |
|
|
RESTRICTED PROPERTY
|
PROPERTY WITH RESTRICTIONS NOT IN INCOME UNTIL VESTED (TRANSFERABLE OR NOT SUBJECT TO SUBSTANTIAL RISK)
T/P CAN INCLUDE IN INCOME THE VALUE AT TRANSFER AND NOT HAVE TO INCLUDE VALUE INCREASE LATER |
|
|
GROUP TERM LIFE INSURANCE
|
UP TO $50,000 IS NOT INCOME. EXCESS, REDUCED BY EE COST, IS INCOME. EXCESS REPORTED IN BOX 12, CODE C. ENTIRE COST IS INCOME IF PROVIDED BY A TRUST/PENSION PLAN. IF IT DOES NOT PROVIDE GENERAL DEATH BENEFITS, NOT GROUP TERM LIFE INSURANCE.
|
|
|
MEALS AND LODGING
|
NOT INCOME IF THEY ARE ON ER PREMISES AND FURNISHED FOR ER CONVENIENCE OR AS A CONDITION OF EMPLOYMENT (LODGING)
|
|
|
MOVING EXPENSE REIMBURSEMENT
|
NOT INCOME IF WOULD HAVE BEEN DEDUCTIBLE. REPORTED IN BOX 12, CODE P IF PAID TO EE.
|
|
|
NO ADDITIONAL COST SERVICES
|
NOT INCOME IF ALSO OFFERED TO CUSTOMERS ORDINARILY
|
|
|
RETIREMENT PLANNING SERVICES
|
PAID BY ER ARE INCOME. IF ER HAS QUALIFIED PLAN, SERVICES PROVIDED BY ER ARE NOT INCOME.
|
|
|
TRANSPORTATION BENEFITS
|
TRAN. IN A COMMUTER VEHICLE BETWEEN EE HOME AND WORK
TRANSIT PASS QUALIFIED PARKING QUALIFIED BIKE COMMUTING CASH UNDER QUALIFIED ARRG. VANPOOL/TRANSIT PASS <$230/MONTH COMMUTER VEHICLE SEATS 6, 80% COMMUTING BIKE COMMUTING < $240/YR CANNOT GET BIKE COMMUTING IN SAME MONTH AS ANY OTHER BENEFIT |
|
|
TUITION REDUCTION
|
EXCLUDED FROM INCOME - FOR EDUCATION
|
|
|
WORKING CONDITION BENEFIT
|
DEDUCTIBLE IF PAID BY EE, NOT INCLUDED IF PAID BY ER
BUSINESS USE OF VEHICLE, JOB RELATED EDUCATION |
|
|
ELECTIVE DEFERRALS
|
OTHER THAN ROTH CONT., TAXABLE FOR SS/MED
401K THRIFT SAVINGS PLAN -FED EE SALARY REDUCTION SIMPLIFIED EE PENSION PLANS SAVINGS INCENTIVE MATCH PLANS FOR EES (SIMPLE) TAX-SHELTERED ANNUTIES (403B) SECTION 501C18D PLANS SECTION 457 PLANS |
|
|
MAXIMUM ELECTIVE DEFERRAL
|
$16,500 ($22,000 IF 55+)
SIMPLE PLAN - $11,500 (14,000 IF 55+) 501C18D - LESSER OF 7,000 OR 25% OF T/P COMPENSATION ERS WITH 401K, 403B, 457 PLANS CAN START QUAL. ROTH PROGRAMS SO EES CAN DESIGNATE AFTER-TAX ROTH CONTR. |
|
|
EXCESS DEFERRALS
|
INCLUDED IN INCOME FOR YEAR OF DEFERRAL, IF PLAN PERMITS, EXCESS DEFERRALS ARE DISTRIBUTED.
IF NOT DISTRIBUTED, CANNOT BE INCLUDED IN BASIS OF CONTRACT, SO TAXED TWICE. |
|
|
WHAT IF EXCESS DEFERRAL IS TAKEN OUT AFTER THE YEAR OF DEFERRAL AND A CORRECTIVE DISTRIBUTION IS MADE?
|
IF MADE BY APRIL 15, NOT INCLUDED IN INCOME IN YEAR IT WAS RECEIVED. IF AFTER APRIL 15, INCLUDED IN INCOME IN THE YEAR IT WAS DEFERRED AND AGAIN IN THE YEAR IT WAS DISTRIBUTED.
|
|
|
DISABILITY PENSION
|
IF RETIRED ON DISABILITY, AMOUNT RECEIVED FROM PLAN BY ER IS INCOME
|
|
|
HOW LONG IS COMPENSATION TO RETIRED ON DISABLITY PERSON CLASSIFIED AS WAGES?
|
UNTIL MINIMUM RETIREMENT AGE, WHEN THEY ARE CLASSIFED AS TAXABLE PENSION OR ANNUITY
|
|
|
WHAT DISABILITY PENSIONS ARE NOT TAXABLE?
|
CERTAIN GOVT. AND MILITARY PENSIONS. IF ANY OF THESE APPLY:
T/P ENTITLED BEFORE 9/25/75 MEMBER OF LISTED GOVT. SERVICE ON 9/24/75 RECEIVED FOR COMBAT RELATED INJURY COULD RECEIVE FROM DEPT. OF VETERANS AFFAIRS IF APPLIED INJURIES FROM TERRORIST ATTACK |
|
|
LONG TERM CARE INSURANCE CONTRACTS
|
EXCLUDED FROM INCOME
$300/DAY REPORTED ON FORM 8853, ARCHER MSAS AND LONG-TERM CARE INSURANCE CONTRACTS |
|
|
WORKER'S COMP
|
FULLY EXEMPT IF PAID UNDER WC ACT OR STATUTE
IF REDUCES SS, THAT PART IS CONSIDERED SS AND SUBJECT TO SS RULE FOR DETERMINING BENEFIT |
|
|
MISCELLANEOUS COMPENSATION
|
ADVANCE COMMISSIONS
BACK PAY AWARDS GOVT. COST OF LIVING NONQUALIFIED DEFERRED COMPENSATION PLANS - BOX 12, CODE Y IF PLAN DOESN'T MEET REQUIREMENTS, INCLUDED IN INCOME AND SHOWN IN BOX 12, CODE Z FMV OF SECURED NOTE SEVERANCE PAY SICK PAY/ST DISABILITY EE MED/FICA PAY BY ER STOCK APPRECIATION RIGHTS WHEN EXERCISED DIFFERENTIAL WAGES (ON ACTIVE DUTY) |
|
|
WHAT IF T/P DOESN'T PROVIDE SSN TO AN ENTITY REQUIRED TO REPORT TO THE GOVT?
|
SUBJECT TO 28% BACKUP WITHHOLDING
|
|
|
SERIES H AND SERIES HH US SAVINGS BOND
|
ISSUED AT FACE VALUE, INTEREST PAID TWICE A YEAR, OFFERED UNTIL 1979. UNTIL AUGUST 2004, SERIES E OR EE BONDS COULD BE EXCHANGED FOR SERIES HH BONDS. SERIES H MATURED IN 30 YEARS AND SERIES HH MATURE IN 20 YEARS.
|
|
|
SERIES EE BONDS
|
ISSUED AT A DISCOUNT. DIFF BETWEEN COST AND FACE AT MATURITY IS INTEREST WHEN REDEEMED. MATURE IN 30 YEARS.
|
|
|
SERIES E BONDS
|
ISSUED AT A DISOUNT UNTIL 1979
|
|
|
SERIES I BONDS
|
INFLATION INDEXED BONDS ISSUED AT FACE VALUE WITH 30 YEAR MATURITY PERIOD. FACE VALUE PLUS INTEREST PAYABLE AT MATURITY.
|
|
|
HOW CAN A CASH METHOD T/P REPORT INCREASE IN REDEMPTION VALUE OF SERIES E, EE, AND I BONDS?
|
THEY CAN REPORT EACH YEAR OR POSTPONE UNTIL BOND IS CASHED OR MATURES, WHICHEVER IS EARLIER. METHOD CHOSEN MUST BE USED FOR ALL CLASSES OF BONDS HELD OR TO BE ACQUIRED.
|
|
|
CAN A T/P SWITCH REPORTING METHODS OF BOND INTEREST?
|
FROM POSTPONED TO REPORTING EACH YEAR - YES, BUT ALL POSTPONED INTEREST MUST BE REPORTED IN YEAR OF SWITCH
FROM YEARLY TO POSTPONED - MUST FILE FORM 3115, APPLICATION FOR CHANGE IN ACCOUNTING METHOD, OR ATTACHED STATEMENT - AUTOMATICALLY GRANTED |
|
|
WHAT IF BONDS ARE CO-OWNED?
|
INTEREST IS TAXABLE TO T/P WHOSE FUNDS PURCHASED THE BOND.
|
|
|
EDUCATION SAVINGS BOND PROGRAM
|
INTEREST ON SERIES EE BONDS ISSUED AFTER 12/31/89 OR A SERIES I BOND IS EXCLUDED IF PROCEEDS ARE USED TO PAY QUALIFIED HIGHER EDUCATION EXPENSES DURING THE SAME YEAR. PURCHASER MUST BE AT LEAST 24 AND BOND ISSUED IN T/P NAME. EXCLUSION NOT AVAILABLE FOR MFS.
|
|
|
WHAT ARE ELIGIBLE HIGHER EDUCATION EXPENSES FOR EDUCATION SAVINGS BOND PROGRAM?
|
TUITION AND FEES REQUIRED FOR T/P, SPOUSE, OR DEPENDENT. ALSO ANY CONTRIBUTION MADE TO A QUALIFIED TUITION PROGRAM
|
|
|
WHAT TAX-FREE BENEFITS REDUCE ELIGIBLE EXPENSES FOR EDUCATION SAVINGS BOND PROGRAM?
|
TAX-FREE SCHOLARSHIPS/FELLOWSHIPS
TAX-FREE PORTION OF A DISTRIBUTION FROM A COVERDELL ESA OR QTP OTHER TAX-FREE PAYMENTS (EXCEPT GIFTS/INHERITANCES) SUCH AS VETERAN EDUC. ASST. BENEFITS, QUALIFIED TUITION REDUCTIONS OR ER PROVIDED EDU. ASST. ANY EXPENSE USED IN FIGURING THE AMER. OPPORTUNITY AND LIFETIME LEARNING CREDITS |
|
|
CURRENT YEAR INTEREST ON EDUCATION SAVINGS BOND PROGRAM
|
EXCLUDED IF TOTAL EXPENSES EXCEED PROCEEDS. IF PROCEEDS ARE MORE, THE EXCLUDABLE AMOUNT IS BASED ON A FRACTION. QUALIFIED HIGHER EDU. EXP/TOTAL REDEMPTION PROCEEDS RECEIVED. USE FORM 8815, EXCLUSION OF INTEREST FROM SERIES EE AND I US SAVINGS BONDS ISSUED AFTER 1989.
|
|
|
INTEREST EXCLUSION PHASE OUT FOR EDUCATION SAVINGS BOND PROGRAM
|
IF SINGLE OR HOH, MODIFIED AGI WITHIN $71,100 - $86,100
IF MFJ OR QW, MODIFIED AGI WITHIN $106,650 - $136,650 |
|
|
TAXABILITY OF US T-BILLS, NOTES AND BONDS
|
SUBJECT TO FED INCOME TAX BUT NOT STATE/LOCAL
IF T/P SELLS BOND BETWEEN INTEREST PAYMENT DATES, SALES PRICE INCLUDES ACCRUED INTEREST. FOR BUYER, INTEREST IS A RETURN OF CAPITAL INVESTMENT RATHER THAN INTEREST, AND REDUCE THE BASIS IN THE BOND. |
|
|
ORIGINAL ISSUE DISCOUNT (OID)
|
FORM OF INTEREST INCLUDED IN INCOME WHEN IT ACCRUES, REGARDLESS IF PAYMENT IS RECEIVED
|
|
|
WHEN CAN A T/P DISREGARD OID AND TREAT IT AS ZERO?
|
WHEN DISCOUNT IS < 25% OF THE STATED REDEMPTION PRICE AT MATURITY X THE YEARS FROM ISSUE TO MATURITY
|
|
|
WHAT DEBT INSTRUMENTS DO NOT OID RULES NOT APPLY TO?
|
TAX-EXEMPT OBLIGATIONS
US SAVINGS BONDS SHORT-TERM DEBT INSTR. OBLIGATIONS ISSUED BY AN INDIVIDUAL BEFORE 3/2/84 LOANS BETWEEN INDIVIDUALS IFF: THE LENDER IS NOT IN THE BUSINESS OF LENDING, LOAN IS $10,000 OR LESS, AVOIDING FED TAX IS NOT ONE OF THE MAIN REASONS FOR THE LOAN |
|
|
CERTIFICATE OF DEPOSIT
|
CD WITH MATURITY OF MORE THAN ONE YEAR IS TREATED AS ANY OTHER OID.
ALSO TIME DEPOSITS, BONUS PLANS, SAVINGS CERTS, DEFERRED INCOME CERTS, BONUS SAVINGS CERTS, AND GROWTH SAVINGS CERTS |
|
|
IF TIME DEPOSIT IS WITHDRAWN EARLY, HOW DOES A T/P REPORT PENALTY?
|
ON FORM 1040. LINE 30
|
|
|
MUNICIPAL BONDS
|
NOT TAXABLE IF ISSUED BY A STATE, DC, A US POSSESSION, OR ANY OF THEIR POLITICAL SUBDIVISIONS. BONDS ISSUED POST 1982 BY INDIAN TRIBAL GOVT. ARE SAME AS ISSUED BY STATE.
|
|
|
ORDINARY DIVIDENDS
|
PAID OUT OF THE EARNINGS AND PROFITS OF A CORP
|
|
|
QUALIFIED DIVIDENDS
|
ORDINARY DIVIDENDS SUBJECT TO SAME 0% OR 15% MAX TAX RATE THAT APPLIES TO NET CAPITAL GAIN. 15% IF REGULAR TAX RATE WOULD BE 25% OR MORE. IF REGULAR RATE WOULD BE LESS THAN 25%, THEN 0%.
|
|
|
WHAT MAKES A QUALIFIED DIVIDEND?
|
PAID BY US CORP OR QUALIFIED FOREIGN CORP
T/P MEETS HOLDING PERIOD: HELD STOCK FOR MORE THAN 60 DAYS DURING 121 DAY PERIOD THAT BEGINS 60 DAYS BEFORE EX-DIVIDEND DATE IN CASE OF PREF. STOCK, STOCK MUST BE HELD FOR MORE THAN 90 DAYS DURING 181 DAY PERIOD THAT BEGINS 90 DAYS BEFORE THE EX-DIV DATE. THE EX-DIV DATE IS THE FIRST DATE FOLLOWING THE DECLARATION OF A DIV. ON WHICH BUYER OF STOCK IS NOT ENTITLED TO RECEIVE NEXT DIV. PAYMENT |
|
|
NONQUALIFIED DIVIDENDS
|
CAPITAL GAIN DIST.
DIV. FROM TAX-EXEMPT CORP OR FARMER'S CO-OP DIV. PAID BY CORP ON ER SECURITIES HELD BY AN ESOP MAINTAINED BY THAT CORP. DIV. ON ANY SHARE OF STOCK TO THE EXTENT THE T/P IS OBLIGATED TO MAKE RELATED PMTS FOR POSITIONS IN SUBSTANTIALLY IDENTICAL STOCK OR SECURITIES PAYMENTS IN LIEU OF DIV. PAYMENTS SHOWN IN FORM 1099-DIV, BOX 1B, FROM A FOREIGN CORP. TO THE EXTENT THAT THEY ARE NOT QUALIFIED DIVS. |
|
|
CAN QUAL. DIV. INCOME INCREASE A DEDUCTIBLE CAPITAL LOSS?
|
NO
|
|
|
DO QUALIFIED DIV. APPEAR ON FORM 8949, SALES OR OTHER DISPOSITIONS OF CAPITAL ASSETS?
|
NO - THEY APPEAR ONLY ON SCHED D TAX WORKSHEET
|
|
|
IS QUAL. DIV. INCOME INCLUDE ANY AMOUNT OF INVESTMENT INCOME ON FORM 4952, INVESTMENT INT. EXP. DEDUCTION?
|
NO
|
|
|
DIVIDEND REINVESTMENT
|
DIVIDENDS USED TO PURCHASE MORE STOCK UNDER A DIV. REIN. PLAN
DIV. INCLUDED IN INC. IF PRICE PAID TO PURCHASE ADDT. STOCK IS EQUAL TO FMV IF PURCHASED AT LESS THAN FMV, FMV ON DIV. PAYMENT DATE IS REPORTED AS INCOME IF PLAN ALLOWS T/P TO INVEST MORE CASH TO PURCHASE ADDT. SHARES AT LESS THAN FMV, T/P MUST REPORT AS DIV. INCOME THE DIFF BETWEEN CASH INVESTED AND FMV OF STOCK REC.D |
|
|
MONEY MARKET MUTUAL FUNDS
|
DIV. INCLUDE AMTS. PAID ON MMMF AND PAYMENTS ON STOCK OF SAVINGS AND LOAN ASSOC.
|
|
|
CAPITAL GAIN DISTRIBUTIONS
|
DIV. PAID BY MUTUAL FUNDS AND REAL ESTATE INVE. TRUSTS
|
|
|
DISTRIBUTIONS OF STOCK AND STOCK RIGHTS
|
GENERALLY NOT TAXABLE - RIGHTS TO ACQUIRE THE CORP STOCK
|
|
|
WHEN ARE DIST OF STOCK/STOCK RIGHTS TAXABLE?
|
ANY S/H HAS THE CHOICE OF $ OR PROP. IN LIEU OF STOCK
DIST. GIVES $ OR OTHER PROP. TO SOME S/H AND IN INC. IN THE % INT. IN THE CORP ASSET OR EARN. AND PROF. TO OTHER S/H DIST. IS IN CONVERTIBLE PRE.STOCK DIFF. CLASSES OF STOCK ARE OFFERED TO COMMON-STOCK SH DIST. IS ON PREF. STOCK |
|
|
BASIS OF STOCK DIV OR STOCK RIGHTS
|
IF TAXABLE, FMV AT TIME OF DIS.
IF NOT TAX, OLD STOCK IS DIVIDED BETWEEN OLD AND NEW |
|
|
HOW ARE FRACTIONAL SHARES TREATED BY T/P?
|
IF CORP HAS PLAN IN WHICH FRAC. SHARES ARE NOT ISSUED BUT SOLD, CASH IS TREATED AS AMT. REALIZED ON SALE OF FRAC. SHARES AND REPORTED ON FORM 8949 AND SCHEDULE D
|
|
|
FORM 1099-INT
|
EXEMPT-INTEREST DIV. SHOWN ON BOX 8
DIV. ON INS. POLICIES - RETURN ON PREMIUMS PAID AND NOT TAXABLE UNTIL FULLY RECOVERED - INTEREST IS TAXABLE AND REPORTED ON FORM 1099-INT AND FORM 1040, LINE 8A |
|
|
DIV ON VET INS. POLICY
|
NOT TAXABLE AND INT. EARNED IS NOT TAXABLE
|
|
|
PATRONAGE DIVIDENDS
|
BOX 1 OF FORM 1099-PATR, TAXABLE DIST. REC. FROM COOPERATIVES, AND ARE TAXABLE UNLESS PAID ON PURCHASE OF PROP.
|
|
|
HOW TO REPORT DIVIDENDS
|
ORDINARY DIV - PART II OF SCHB
IF < $1,500, DIRECTLY ON 1040 QUAL. DIV ON SCHB OR 1040, 9B CAP GAIN DIS SHOULD BE REP. AS LTCG LIQUIDATING DIS. ON BOX 8 OR 9 OF 1099-DIV REDUCE STOCK BASIS TO ZERO, AND EXCESS IS CAP GAIN ON FORM 8949 AND SCH. D |
|
|
RENTAL INCOME
|
ANY AMTS. PAID BY TENANT TO LANDLORD EXCEPT DEPOSITS THAT WILL BE RETURNED. IF PAYMENT IS TO RESTORE PART OF PROP., INCOME IS EXCESS OVER COST.
|
|
|
STANDARD MILEAGE RATE FOR BUSINESS USE
|
50 CENTS PER MILE FROM 1/1-6/30
55.5 CENTS PER MILE FROM 7/1-12/31 |
|
|
NOT RENTED FOR PROFIT
|
INCOME FROM NOT FOR PROFIT RENTAL IS OTHER INCOME ON FORM 1040, LINE 21
|
|
|
PERSONAL USE OF VACATION HOMES AND OTHER DWELLING UNITS
|
IF UNIT IS RENTAL AND PERSONAL, EXPENSES ARE DIVIDED PROPORTIONATELY
|
|
|
WHAT IS A DWELLING UNIT?
|
HOUSE, APT. CONDO, BOAT, MOBILE HOME, VACATION HOME
|
|
|
WHAT IS NOT A DWELLING UNIT?
|
HOTEL, MOTEL, INN, SIMILAR ESTABLISHMENT IF AVAIL. TO CUSTOMERS AND NOT USED AS A HOME BY OWNER
|
|
|
WHAT CONSTITUTES BEING USED AS A HOME BY AN OWNER?
|
PERSONAL USE OF 14 DAYS OR 10% OF DAYS RENTED OUT
|
|
|
DEPRECIATION OF RENTAL PROPERTY
|
MODIFIED ACCELERATED COST RECOVERY SYSTEM (MACRS) IF USED AS A HOME AND CHANGED TO A RENTAL IN 2011
|
|
|
CAN A T/P CLAIM S 179 DEDUCTION FOR RENTAL PROPERTY?
|
NO
|
|
|
LIMITS ON RENTAL LOSSES
|
AT-RISK RULES
PASSIVE ACTIVITY RULES |
|
|
AT-RISK RULES
|
LIMIT LOSS TO THE AMOUNT AT RISK: CASH CONTRIBUTED AND ADJUSTED BASIS OF OTHER PROP. CONTR., AMTS BORROWED FOR USE IN ACTIVITY
FORM 6198, AT-RISK LIMITATIONS, IS USED TO COMPUTE CURRENT YEAR APPLY TO RENTAL, BUSINESS, AND FARMING ACTIVITIES |
|
|
PASSIVE ACTIVITY RULES
|
ONCE AT-RISK LIMITS ARE MET. PASSIVE INCOME IS ONLY INCOME THAT CAN BE OFFSET BY PASSIVE LOSSES.
REAL ESTATE PROFESSIONAL IS NOT LIMITED: MORE THAN 1/2 OF SERVICES PERFORMED BY T/P WERE REAL ESTATE RELATED, AND T/P PERFORMED MORE THAN 750 HRS. IN REAL ESTATE ACTIVITY |
|
|
SPECIAL ALLOWANCE FOR PASSIVE LOSS
|
$25,000 IS ALLOWED AGAINST NONPASSIVE INCOME IF LOSS WAS INCURRED IN A RENTAL REAL ESTATE ACTIVITY IN WHICH T/P PARTICIPATED. ALLOWABLE AMT IS 12,500 IF MFS AND LIVED APART. IF MFS AND LIVED TOGETHER, NO OFFSET.
ACTIVE PART. IS IF T/P OWNS 10% AND MAKES MGR DECISIONS REDUCED BY 50% OF THE AMOUNT THAT MODIFIED AGI EXCEEDS 100,000 AND IS PHASED OUT AT 150,000. MODIFIED AGI DOES NOT INCLUDE TAXABLE SS, IRA OR 501C18 DEDUCTIONS, US BOND EXCL. FOR HIGH ED, ANY PASSIVE ACT LOSS OR DED FOR SE TAXES |
|
|
WHERE ARE RENTAL ACTIVIES REPORTED?
|
SCHEDULE E IF OWNER IS ONLY PROVIDING MIN. SVCS.
IF OWNER PROVIDES SIG. SVCS, INCOME AND EXP ARE ON SCH. C |
|
|
PERSONAL PROPERTY RENTAL
|
FOR INCOME:SCH. C
NOT INCOME: LINE 21, AND EXP ON LINE 36 AND WRITE PPR ON THE DOTTED LINE IF NOT FOR PROFIT, DED. ARE MISC. ITEMIZED DED. LIMITED TO INCOME, SO NO LOSS IS ALLOWED |
|
|
GAMBLING INCOME
|
WINNINGS FROM LOTTERY, RAFFLES, RACES, CASINOS, FMV OF PRIZES
RECREATIONAL - LINE 21 OF 1040 AND EXP. ON SCH A PROFESSIONAL - SCHED C LOSSES CANNOT EXCEED WINNING SHOULD KEEP A DIARY: DATE, TYPE OF WAGER, NAME/ADD OF GAMBLING ESTA., AMTS., NAMES OF OTHER PEOPLE PRESENT |
|
|
DEBT FORGIVENESS INCOME
|
NON-BUSINESS REPORT ON LINE 21
BUSINESS REPORT ON SCH C IF FIN. INST. OFFERS DISC. ON EARLY PMT, DISC. IS CANCELED DEBT INCOME IF T/P IS STOCKHOLDER AND CORP FORGIVES DEBT, DIV. INC IF INCLUDED IN INCOME AND T/P PAYS LATER, T/P CAN FILE A CLAIM FOR REFUND |
|
|
EXCEPTIONS TO DEBT FORGIVENESS
|
STUDENT LOANS REQUIRING SERVICE TO BE FORGIVEN,
PAYMENTS MADE BY NAT. HEALTH SVC CORPS LOAN REPAYMENT PROG OR STATE EDU. LOAN PROG. UNDER PUBLIC HSA IF PMT OF DEBT WOULD RESULT IN DEDUCTION T/P OWES ON PROP. AND SELLER REDUCES AMT. OWED, RED. IS PURCH. PRICE ADJ. EXCLUDED DEBT FORM 982, REDUCTION OF TAX ATTRIBUTES DUE TO DISCHARGE OF INDEBTEDNESS (AND SECTION 1082 BASIS ADJ) DEBT IS CANCELLED IN BANKRUPTCY UNDER TITLE 11 DEBT IS CANCELED WHEN T/P IS INSOLVENT DEBT IS QUAL. FARM DEBT AND IS CANCELED BY QUAL. PERSON DEBT IS QUAL. REAL PROP. BUSINESS DEBT DEBT IS QUAL PRINC.RESIDENCE INDEBTEDNESS $2 MILLION LIMIT ON PRINCIPAL RESIDENCE |
|
|
FOREIGN EARNED INCOME IN A CURRENCY NOT READILY CONVERTIBLE INTO USD
|
BLOCKED OR DEFERRABLE INCOME REPORTED AS: THE USD THAT A T/P HAS IN THE US, OR POSTPONE REPORTING UNTIL UNBLOCKED - FILE ONLY AN INFO RETURN
|
|
|
HOW TO STOP WITHHOLDING ON FOREIGN EARNED INCOME
|
T/P SHOULD GIVE ER FORM 673, STATEMENT FOR CLAIMING EXEMPTION FROM WH ON FEI ELIGIBLE FOR THE EXCLUSION(S) PROVIDED BY SECTION 911
|
|
|
EXCLUSION ON FOREIGN EARNED INCOME
|
US CIT/US RES MAY EXCLUDE $92,900 AND MAY BE ABLE TO EXCLUDE CERTAIN FOREIGN HOUSING AMTS.
MUST SATISFY ALL 3: TAX HOME WAS A FOREIGN CTRY HAD FOREIGN EI WAS: US CIT. WHO IS RESIDENT OF FOREIGN CTRY FOR AN UNINTERUPPTED PERIOD THAT INCLUDES TAX YR, USRA IN COUNTRY WITH A TREATY IN EFFECT, US CIT OR USRA PHYSICALLY PRESENT FOR AT LEAST 330 DAYS DURING 12 MONTHS |
|
|
WHAT COUNTRIES ARE NOT CONSIDERED FOREIGN COUNTRIES?
|
PUERTO RICO, GUAM, COMM. OF NORTHERN MARIANA ISLANDS, US VIRGIN ISLANDS, OR US POSSESSIONS LIKE JOHNSTON ISLAND
|
|
|
HOW DOES T/P MEET BONA FIDE RESIDENCE TEST?
|
BONA FIDE RESIDENT FOR UNINTERUPPTED PERIOD THAT INCLUDES AN ENTIRE YEAR. NEED TO ESTABLISH A RESIDENCE THAT IS INTENDED TO BE PERMANENT.
|
|
|
WHAT COUNTRIES ARE US RESIDENTS NOT LEGALLY ALLOWED TO RESIDE IN?
|
CUBA. GUANTANAMO BAY DOES NOT COUNT.
|
|
|
HOW TO TAKE FOREIGN EARNED INCOME EXCLUSION?
|
FORM 2555, FOREIGN EARNED INCOME, OR FORM 2555-EZ, FOREIGN EARNED INCOME EXCLUSION
|
|
|
FOREIGN COUNTRY HOUSING EXCLUSION
|
PAID FOR WITH ER PROVIDED AMTS, HOUSING DEDUCTION ONLY AMTS PAID FOR WITH SE INCOME
HOUSING AMT IS TOTAL EXPENSES FOR YEAR MINUS BASE HOUSING AMT. BASE HOUSING AMT IS 16% OF EXCLUSION AMT X #DAYS IN QUALIFYING PERIOD. $40.72 PER DAY 2011 QUALIFIED HOUSING EXP = $76.36 PER DAY |
|
|
HOW ARE TAXABLE SCHOLARSHIPS REPORTED?
|
LINE 7 OF 1040, WITH NOTATION SCH
|
|
|
SS BENEFITS
|
MONTHLY RETIREMENT, SURVIVOR AND DISABILITY BENEFITS. DOES NOT INCLUDE SSI PAYMENTS, WHICH ARE NOT TAXABLE.
|
|
|
SS EQUIVALENT BENEFIT (SSEB)
|
EQUIVALENT TIER 1 RAILROAD RETIREMENT BENEFITS ARE THE PART OF TIER 1 BENEFITS THAT A RR EE OR BENEFICIARY WOULD HAVE BEEN ENTITLED TO RECEIVE UNDER THE SS SYSTEM
|
|
|
HOW ARE SS AND SSEB BENEFITS REPORTED?
|
FORM SSA-1099, BOX 5
|
|
|
ARE SS AND SSEB TAXABLE?
|
UP TO 85% CAN BE. CALC. BY COMPARING OTHER INCOME, INCLUDING TAX-EXEMPT INTEREST, PLUS 1/2 OF BENEFITS, TO THE BASE AMOUNT. THIS IS THEN COMPARED TO AN ADJUSTED BASE AMOUNT TO DETERMINE HOW MUCH IS SUBJECT.
|
|
|
BASE AMOUNT AND ADJ. BASE AMT FOR COMPUTING TAXABLE SS/SSEB
|
S, HOH, QW, MFS NOT LIVING TOGETHER - 25,000/34,000
MFS LIVING TOGETHER - 0 MFJ - 32,000/44,000 |
|
|
HOW IS TAXABILITY DETERMINED FOR SS/SSEB?
|
IN INCOME<BASE, NO TAX
IF INCOME>BASE<ADJ BASE, UP TO 50% TAX IF INCOME>ADJ BASE, UP TO 85% ARE TAX |
|
|
1040 WORKSHEET TO DETERMINE TAXABLE SS/SSEB
|
INCREASE TOTAL INC. BY T/E INT. AND 1/2 SS/SSEB
ADD EXCL. TO INCOME AND SUBTRACT ADJ. TO INCOME SUBTRACT THE BAE AMOUNT IF ZERO OR LESS, NO TAX DETERMINE SMALLER OF STEP 3 OR 9,000 (12,000 IF MFJ, 0 IF MFS LIVING APART) AND DIVIDE BY 2 EXCESS OF STEP 3 OVER 9000 IS X 85% ADD LINE 5 TO SMALLER OF 1/2 OF THE SS/SSEB OR LINE 4 MULTIPLY X 85% OF SS/SSEB TAXABLE BENEFITS ARE SMALLER OF STEP 6 OR STEP7 |
|
|
LUMP-SUM BENEFITS
|
REPORTED ON SSA-1099. ALL IS TREATED AS 2011 BENEFITS UNLESS SPECIAL ELECTION TO DETERMINE HOW MUCH ALLOCABLE TO PRIOR YEAR WOULD HAVE BEEN TAXABLE THAT YEAR AND THEN INCLUDING THAT IN 2011.
IF DISABILITY FROM ER INCLUDED IN INCOME IN EARLIER YEAR, THEN REPAID, REPAYMENT IS ITEM. DED. UNLESS >3,000, TAKE CREDIT. IF NEGATIVE FIGURE DUE TO REPAYMENT, T/P CAN TAKE AN ITEM. DED. FOR PART OF THE FIGURE THAT REPRESENTS BENEFITS INCLUDED IN INCOME IN AN EARLIER YEAR. |
|
|
BARTERING
|
FMV OF PROPERTY OR SERVICE IS INCOME.
|
|
|
INDEPENDENT CONTRACTOR INCOME
|
REPORTS ON SCH C OR F
|
|
|
HOBBY INCOME
|
LACKS PROFIT MOTIVE, LOSS CANNOT BE USED TO OFFSET OTHER INCOME.
|
|
|
DECIDING IF A PROFIT MOTIVE EXISTS
|
IF ACTIVITY SHOWS A PROFIT IN AT LEAST 3 OF LAST 5 YEARS. IF HORSES, 2 OF LAST 7 YEARS. IF NEITHER, NINE OTHER FACTORS:
BUSINESSLIKE MANNER TIME AND EFFORT DEPENDS ON INCOME LOSSES ARE BEYOND T/P CONTROL T/P CHANGES METHOD OF OPERATION IN ATTEMPT TO IMPROVE PROFITS T/P OR ADVISOR HAS KNOWLEDGE NEEDED TO MAKE IT A BUSINESS T/P MADE A PROFIT IN SIMILAR ACTIVITY IN PAST MAKES A PROFIT IN SOME YEARS, AND HOW MUCH T/P CAN EXPECT TO MAKE A FUTURE PROFIT FROM THE APPRECIATION OF THE ASSETS USED IN ACTIVITY |
|
|
ALIMONY
|
INCOME, NOT WAGES
NOT VOLUNTARY PAYMENTS SPOUSE NOT LIVING TOGETHER NO LIABILITY IF SPOUSE DIES |
|
|
NONTAXABLE COMBAT PAY
|
REPORTED IN BOX 12, CODE Q
|
|
|
UNEMPLOYMENT
|
TAXABLE NOT WAGES
|
|
|
WELFARE/PUBLIC ASSISTANCE
|
NOT INCOME
|
|
|
RECOVERIES
|
INCLUDED IN INCOME IF TAX BENEFIT WAS DERIVED FROM DED.
|
|
|
TRADITIONAL IRA CONTRIBUTIONS
|
T/P 70.5- CAN CONT. UP TO LESSER OF $5000 OR TAXABLE COMP., REDUCED BY CONT. TO ROTH IRAS
50+ HAVE ADDT'L CATCH-UP CONT. $1,000 |
|
|
CONTRIBUTIONS TO SPOUSAL IRA
|
MFJ
UNDER AGE 70.5 AT LEAST ONE SPOUSE HAS TAXABLE COMP. |
|
|
TOTAL COMBINED CONTRIBUTION TO IRA AND SPOUSAL IRA
|
$10,000 ($11,000 IF ONE SPOUSE IS 50+, $12,000 IF BOTH ARE 50+)
TOTAL COMP. OF BOTH SPOUSES, REDUCED BY SPOUSE IRA CONT. FOR THE YEAR TO A TRADITIONAL IRA AND ANY CONT. TO SPOUSE'S ROTH IRA |
|
|
WHAT IF CONTRIBUTIONS TO IRA ARE LESS THAN OR MORE THAN THE LIMIT?
|
LESS THAN CANNOT BE MADE UP IN A LATER YEAR. MORE THAN CAN BE APPLIED TO LATER YEAR BUT PENALTIES APPLY UNTIL EXCESS IS ELIMINATED.
|
|
|
WHEN CAN IRA CONTRIBUTIONS BE MADE?
|
ANY TIME DURING THE YEAR OR BY THE DUE DATE OF THE RETURN, NOT INCLUDING EXTENSIONS. IF MADE AFTER END OF YEAR AND BEFORE DUE DATE OF RETURN, T/P MUST DESIGNATE YEAR.
|
|
|
TAXABLE COMPENSATION FOR IRA CONTRIBUTION PURPOSES
|
WAGES, SALARIES, TIPS, FEES, BONUSES, OTHER AMTS. FOR SVCS.
SCHOLARSHIP/FELLOWSHIP BOX 1 OF W-2 COMMISSIONS REC.D AS % OF PROFIT OR SALES PRICE IF SE, NET EARNINGS REDUCED BY T/P DED. FOR CONTR. ON OWN BEHALF TO RET. PLANS AND DED. AMT. OF SE TAX IF PARTNER PROVIDES SVCS THAT ARE AN INCOME-PRODUCING FACTOR ALIMONY/SEP. MTC PMTS DIFFERENTIAL WAGES COMBAT PAY |
|
|
NOT COMPENSATION FOR IRA CONT. PURPOSES
|
PROPERTY EARNINGS
PENSION/ANNUITY DEF. COMP. INCOME FROM PTSHP WHEN T/P DOES NOT PROVIDE SVS THAT MATERIALLY PRODUCE INC. FOREIGN EI AND/OR HOUSING COST ANY OTHER AMTS EXCL. FROM INCOME, EXCEPT COMBAT PAY |
|
|
IRA CONTRIBUTION DEDUCTION
|
NOT REQUIRED.
IF T/P AND SPOUSE DO NOT PARTICIPATE IN ER RET. PLAN, THEY CAN DEDUCT FULL IRA CONTRIBUTION IF T/P AND SPOUSE PARTICIPATE IN ER RET. PLAN, DED. MAY BE LIMITED RETIREMENT PLAN ON W-2 WILL BE CHECKED |
|
|
DEDUCTION PHASE OUT RULES FOR IRA CONTRIBUTION
|
NEITHER SPOUSE COVERED BY RET. PLAN, THE LESSER OF TOTAL CONTRIBUTION (UP TO 5,000 OR 6,000 IF 50+) OR 100% COMP. CAN BE DED. BY EACH
S COVERED BY ER PLAN, PHASED OUT WHEN MAGI IS >56,000<66,000 BOTH SPOUSES COVERED BY PLAN, PHASED OUT WHEN MFJ MAGI IS BETWEEN 90,000 AND 110,000 IF IRA OWNER IS NOT COVERED, BUT SPOUSE IS, PHASE OUT FOR NONCOVERED SPOUSE ON MFJ RETURN IS 169,000 TO 179,000 AND COVERED SPOUSE IS PHASED OUT WHEN MAGI IS BETWEEN 90,000 AND 110,000 FOR A SPOUSAL IRA, DED. FOR THE SPOUSE WITH LESS COMP. IS LIMITED TO LESSER OF 5,000(6,000 IF 50+) OR TOTAL TAX. COMP. OF BOTH SPOUSES, REDUCED BY IRA DED. OR DES.NON-DED. CONTR. OF OTHER SPOUSE AND OTHER SPOUSE'S CONT. TO ROTH IRA |
|
|
MAGI FOR IRA CONTRIBUTION PHASE OUT DETERMINATION
|
AGI W/O IRA DED., STUDENT LOAN INTEREST, TUITION/FEES, DOMESTIC PROD. ACT., EXCL. OF SERIES EE BOND INT., EXCL. OF ER PAID ADOPTION EXP.
|
|
|
NONDEDUCTIBLE AMOUNTS OF IRA CONTRIBUTION
|
FORM 8606, NONDEDUCTIBLE IRAS, OR WITHDRAWN BY THE DUE DATE OF THE RETURN.
|
|
|
ROTH IRA
|
PERMITS NON-DED. CONT. AND NORMALLY RESULTS IN NON-TAX. DIST. PERMITTED AT ANY AGE AS LONG AS COMP. AND MAGI REQ. ARE MET
|
|
|
ROTH IRA MAGI LIMIT
|
169,000-179,000 MFJ OR QW
107,000-122,000 S, HOH, MFS LIVING APART 0-10,000 MFS LIVING TOGETHER |
|
|
COMPUTING MAGI FOR ROTH IRA
|
SAME AS IRA WITH SOME MODIFICATIONS:
SUBTRACT INC RESULTING FROM CONV. OF IRA TO ROTH IRA SUBTRACT MIN. REQ. DIST. FROM QUAL. RET. PLAN, INCLUDING IRA (FOR CONV. ONLY) |
|
|
ROTH CONVERSION
|
TRADITIONAL TO ROTH:
ROLLOVER, IN WHICH T/P REC. DIST. FROM IRA AND ROLLS IT TO ROTH IRA WITHIN 60 DAYS TRUSTEE-TRUSTEE TRANSFER, WHERE T/P DIRECTS TRUSTEE OF IRA TO TRANSFER TO TRUSTEE OF ROTH IRA SAME-TRUSTEE TRANSFER, WHERE T/P DIRECTS TRUSTEE TO TRANSFER IRA TO ROTH IRA MAINTAINED BY SAME TRUSTEE |
|
|
SIMPLE OR SEP IRA TO ROTH IRA
|
SAME RULES AS TRADITIONAL IRA
AMT. FROM SIMPLE IRA DURING 2 YEAR PERIOD BEG. ON DAY T/P FIRST PART. IN ANY SIMPLE IRA PLAN MAINTAINED BY ER IS NOT ELIGIBLE. |
|
|
ROLLOVER TO ROTH IRA
|
QUALIFIED PENSION, PROFIT SHARING, OR STOCK BONUS PLAN (INCLUDING 401K)
INDIV. RETIREMENT ANN. PLAN DEFERRED COMP PLAN OR STATE/LOCAL GOVT. (457 PLAN) |
|
|
AMOUNTS NOT ELIGIBLE FOR ROLLOVER FROM QUAL. PLAN
|
REQ. MIN. DIST.
HARDSHIP DIST. ANY OF A SERIES OF SUBST. EQUAL PER. DIST. PAID AT LEAST ONCE A YEAR, BASED ON LIFE EXPECTANCY OR FOR 10+ YEARS CORRECTIVE DIST. OF EXC. CONT. OR EXC. DEFERRALS, AND ANY INCOME ALLOCABLE TO EXCESS LOAN TREATED AS DIST. BECAUSE IT DOES NOT SATISFY CERTAIN REQ. EITHER WHEN MADE OR LATER DIV. ON ER SECURITIES COST OF LIFE INS. COVERAGE |
|
|
2010 ROTH CONVERSIONS
|
T/P HAD CHOICE TO DEFER INCOME FROM COVERTING IRA TO ROTH IRA IN 2010 UNTIL 2011. HALF IN 2011, HALF IN 2012.
|
|
|
EXCESS IRA CONTRIBUTIONS
|
EXCISE TAX OF 6%
DOES NOT APPLY IF WITHDRAWN BY DUE DATE OF RETURN INCLUDING EXTENSIONS IF LEFT IN THE ACCT., TREATED AS CONTRIBUTED NEXT YR, AND IF EXCESS AGAIN, SUBJECT TO 6% TAX AGAIN, AND SO ON. EARNINGS OF EXCESS CONTR. ARE INCLUDIBLE IN INCOME IN YEAR PAID. IF T/P UNDER 59.5, DIST. OF EARNINGS IS SUBJECT TO THE ADDT.'L 10% TAX IN THE YEAR OF CONT. UNLESS EXCEPTION APPLIES. |
|
|
DISTRIBUTIONS FROM ER RETIREMENT PLAN, IRA, OR COMMERCIAL ANNUITY
|
FORM 1099-R, TAXABLE UNLESS THERE IS A BASIS.
TRADITIONAL IRAS ONLY HAVE BASIS WHEN NON-DED. CONT. ARE MADE OR AFTER-TAX AMTS. ARE ROLLED OVER FROM AN ER PLAN. SINCE ROTH IRA CONT. ARE NOT DED., THEY CREATED BASIS. T/P ALSO HAVE BASIS WHEN THEY CONVERT AN AMT. TO A ROTH IRA. ER RET. PLANS ONLY HAVE BASIS WHEN AFTER-TAX MONEY WAS CONTRIBUTED OR ER CONT. WERE INCLUDED IN THE EE INCOME. COMMERCIAL ANNUITEIES ARE PURCHASED WITH AFTER-TAX MONEY THEREBY CREATING BASIS. |
|
|
TAXABILITY OF TRADITIONAL IRA DISTRIBUTIONS
|
T/P WHO ONLY MAKE DED. CONT. HAVE NO BASIS SO ENTIRE IRA IS TAXABLE. IF THERE IS BASIS, CALCULATION IS NEEDED TO DETERMINE TAXABILITY.
1. DETERMINE BASIS OF ALL IRAS AT YEAR END 2. ADD CONT. MADE FOR CTY. (INCLUDE CONT. MADE BEFORE 4/17/12 BUT NOT ROLLOVER) 3. DETERMINE VALUE OF ALL IRAS AT END OF CURRENT YEAR, INCLUDING ROLLOVERS. 4. ADD DIST. REC'D DURING CY (NOT ROLLOVERS) 5. DIVIDE SUM FOUND IN 2 BY SUM FOUND IN 4. MULTIPLY DIST. BY THIS DECIMAL. THIS IS NONTAX AMT. OF DIST. TOTAL DIST. - NONTAX. = TAX AMOUNT OF DIST. |
|
|
REQUIRED MINIMUM DISTRIBUTIONS (RMD)
|
TRADITIONAL IRA MUST BE DISTRIBUTED WHEN T/P TURNS 70.5 AND EVERY YEAR AFTER.
RMD MUST BE MADE BY 12/31. DURING YEAR T/P TURNS 70.5, DIST. CAN BE MADE BY APRIL 1 OF FOLLOWING YEAR. RMD IS NOT ELIGIBLE FOR ROLLOVER. |
|
|
ROTH IRA DISTRIBUTIONS
|
QUALIFIED DIST. ARE TAX FREE. NONQUALIFIED DIST. FIRST REDUCE BASIS AND TO THE EXTENT THAT THEY EXCEED BASIS ARE TAXABLE. BASIS COMES FROM REG. CONT. AND CONV.
|
|
|
QUALIFIED DIST. OF ROTH IRA
|
MADE AFTER 5 YEARS
AFTER T/P TURNS 59.5, BECAUSE OF DISABILITY, MADE TO A BENEFICIARY AFTER DEATH, OR ONE THAT MEETS THE REQUIREMENTS FOR A FIRST TIME HOMEBUYER |
|
|
NONQUALIFIED DIST. OF ROTH IRA
|
MADE FROM THE FOLLOWING AMTS. IN THE FOLLOWING ORDER:
REGULAR CONT. CONV. CONTR., FIFO, TAXABLE FIRST EARNINGS ON CONT. |
|
|
LOSS ON ROTH IRA INVESTMENT
|
T/P CAN RECOGNIZE LOSS AS A MISC. ITEMIZED DED. SUBJECT TO 2% OF AGI LIMIT, ONLY WHEN ALL AMTS. IN ALL ROTH IRA ACCTS. HAVE BEEN DIST. AND THE TOTAL DIST. ARE LESS THAN UNRECOVERED BASIS
|
|
|
QUALIFIED CHARITABLE DISTRIBUTIONS
|
A QCD IS A NONTAXABLE DIS. MADE DIRECTLY BY THE TRUSTEE OF THE IRA (OTHER THAN AN OPERATING SEP OR SIMPLE IRA) TO AN ORG. ELIGIBLE TO RECEIVE TAX-DED. CONT. MUST BE 70.5 WHEN DIS. IS MADE. TOTAL QCD CANNOT EXCEED $100,000. AMOUNT OF QCD IS LIMITED TO AMT. OF THE DIST. OTHERWISE INCL. IN INC. NO CHARITABLE DEDUCTION ALLOWED, BUT DIST. IS NOT INCLUDED IN INCOME.
|
|
|
DEATH OF IRA OWNER
|
IRA INCOME BELONGS TO DECEDENT AND IS NOT ELIGIBLE FOR A BASIS ADJUSTMENT AS OTHER TYPES OF INHERITED PROPERTY. IF A SPOUSE INHERITS AN IRA, THE SPOUSE CAN TREAT THE IRA AS HIS OR HER OWN OR AS A BENEFICIARY IRA. SOMEONE OTHER THAN SPOUSE, HE OR SHE CANNOT TREAT IT AS HER OWN. BENEFICIARY CAN MAKE TRUSTEE-TRUSTEE TRANSFER AS LONG AS THE IRA INTO WHICH AMTS ARE MOVED IS SET UP AND MAINTAINED IN THE NAME OF THE DECEASED IRA OWNER FOR THE BENEFIT OF THE T/P AS BENEFICIARY.
|
|
|
BENEFICIARIES OF A TRADITIONAL IRA
|
MUST INCLUDE INCOME IN ANY DISTRIBUTIONS. IF DECEDENT HAD BASIS, BENEFICIARY RECEIVES BASIS. CAN CLAIM DEDUCTION FOR ESTATE TAX IF ESTATE TAX WAS PAID ON ANY PART OF A DIST. THAT IS INCOME IN RESPECT OF DECEDENT.
|
|
|
BENEFICIARIES OF ROTH IRA
|
NONQUALIFIED DIST IFF: OWNER DIES BEFORE END OF THESE 5 YEAR PERIODS: 1ST TAXABLE YEAR FOR WHICH CONT. WAS MADE, STARTING WITH YEAR OF CONVERSION OF IRA OR ROLLOVER FROM QUAL. RET. PLAN
ONCE 5 YEAR PERIOD IS COMPLETED, BEN. WILL RECEIVE QUAL. DIST. REGARDLESS OF AGE |
|
|
COST OR INVESTMENT IN RETIREMENT PLAN CONTRACT
|
AMOUNTS PAID IN TOTAL CONTRIBUTIONS AND AMOUNTS AN ER CONTRIBUTED THAT WERE INCLUDED IN INCOME. DOES NOT INCLUDE TAX-DEFERRED AMOUNTS.
|
|
|
PERIODIC PAYMENTS OF RETIREMENT PLAN
|
PAID AT REGULAR INTERVALS FOR MORE THAN ONE YEAR. FULLY TAXABLE IF T/P HAS NO COST BASIS. IF T/P HAS COST BASIS TO RECOVER, PORTION OF EACH PAYMENT IS EXCLUDED FROM INCOME.
IF TO BE PAID OVER A LIFETIME, THE TAX-FREE PART OF ANNUITY IS CALCULATED USING SIMPLIFIED METHOD OR GENERAL RULE. |
|
|
SIMPLIFIED METHOD - PERIODIC PAYMENT
|
TAX FREE PART OF EACH PAYMENT IS DETERMINED BY DIVIDING THE COST IN THE CONTRACT BY THE TOTAL NUMBER OF ANTICIPATED PAYMENTS.
|
|
|
GENERAL RULE- PERIODIC PAYMENTS
|
PAYMENTS FROM A NQ PLAN OR QP IF T/P IS 75+ WITH PMTS OF AT LEAST 5 YRS
RATIO OF COST TO EXPECTED RETURN |
|
|
NONPERIODIC PAYMENTS
|
FROM AN ANNUITY CONTRACT ON OR AFTER STARTING DATE, FULLY TAXABLE
BEFORE STARTING DATE , PART OF COST ALLOC. TO COST BEFORE START DATE FROM A PLAN OTHER THAN QUAL. RET. PLAN, IT IS ALLOC. FIRST TO EARNINGS AND THEN TO THE COST OF CONTRACT |
|
|
LUMP SUM DISTRIBUTION
|
REPORTING TAXABLE PART OPTIONS:
BEFORE 1974 AS CG AND PART AFTER 1973 AS ORDINARY INCOME REPORT PRE-74 AS CG AND USE 10 YEAR TAX OPTION TO FIGURE TAX ON POST-73 USE 10 YR TAX OPTION TO FIGURE TAX ON TOTAL ROLL OVER ALL OR PART OF DIST. REPORT ANY AMT. NOT ROLLED OVER AS ORDINARY INCOME. REPORT ENTIRE TAXABLE PORTION AS ORDINARY INCOME. |
|
|
10 YEAR TAX OPTION
|
PAID IN YEAR OF DIST., ON FORM 4972 TAX ON LUMP-SUM DIST. CAN ELECTED ONCE AND ONLY IF T/P WAS BORN BEFORE 1/2/36
FORM 4972 IS ALSO USED IF A PORTION OF THE DIST. IS ELIGIBLE FOR 20% CG ELECTION. IF PORTION IS ELIGIBLE FOR 20% CG, T/P CAN ELECT TO TREAT IT AS ORDINARY AND INCLUDE IT IN COMPUTING THE 10 YEAR TAX OPTION. |
|
|
DIRECT ROLLOVER
|
TRUSTEE-TRUSTEE TRANSFER
NOT TAXABLE NOT AFFECTED BY ONE YEAR WAITING PERIOD BETWEEN IRA ROLLOVERS |
|
|
ROLLOVER
|
STARTS WITH DIST. TO T/P
T/P HAS 60 DAYS TO ROLLOVER ONE YEAR BETWEEN IRA ROLLOVERS MAY BE ABLE TO ROLL OVER TAX FREE, A DIST. FROM IRA TO A QUAL. PLAN. THESE PLANS INCLUDE FEDERAL THRIFT SAVINGS FUND, DEF. COMP PLANS OF GOVT., TAX SHEL ANN. PLAN |
|
|
DIVORCE TRANSFER
|
THE INTEREST IN THE IRA STARTING FROM DATE OF TRANSFER IS TREATED AS RECIPIENT'S SPOUSES IRA. TRANSFER IS TAX FREE
|
|
|
PENALTY FOR EARLY DISTRIBUTIONS
|
BEFORE 59.5 SUBJECT TO 10% PENALTY
EARLY DIST. FROM SIMPLE RETIREMENT ACCOUNT MADE WITHIN 2 YEARS OF BEG. PART. IN THE SIMPLE ARE SUBJECT TO 25% EARLY DIST. TAX. DOES NOT APPLY TO PART OF A DIST. THAT REPRESENTS A RETURN OF BASIS. |
|
|
EXCEPTIONS TO 10% PENALTY FOR EARLY WITHDRAWAL
|
CERTAIN MEDICAL EXP. UP TO 7.5% OF AGI
DISABILITY DEATH SUBSTANTIALLY EQUAL PERIODIC PAYMENTS IRS LEVY RESERVIST OR NAT. GUARD DURING A PERIOD OF ACTIVE DUTY FOR AT LEAST 180 DAYS |
|
|
EXCEPTIONS TO 10% PENALTY FOR EARLY WITHDRAWAL OF EMPLOYER PLANS ONLY
|
AFTER T/P SEPARATION FROM SERVICE IN OR AFTER THE YEAR HE TURNS 55 (50 FOR QUALIFIED PUBLIC SAFETY OFFICER)
DIS. TO AN ALT. PAYEE UNDER QDRO. A QDRO IS NOT NEEDED TO SPLIT IRA BETWEEN DIVORCING COUPLES |
|
|
EXCEPTIONS TO 10% PENALTY FOR EARLY WITHDRAWAL OF IRAS ONLY
|
FIRST TIME HOMEBUYER $10K
HIGHER ED. EXP. HEALTH INS. PREM. FOR UNEMPLOYED INDIV. - IF T/P RECEIVED UNEMPLOYMENT FOR 12 WEEKS AND NO LATER THAN 60 DAYS AFTER RE-EMPLOYMENT |
|
|
PENALTY FOR EARLY WITHDRAWAL OF NON-QUALIFIED COMMERCIAL ANNUITY
|
BEFORE 59.5, 10%
EXCEPTIONS ARE DEATH, DISABILITY, OR SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ADDITIONAL TAX IS CALC. AND REPORTED ON FORM 5329, ADDT'L TAXES ON QUALIFIED PLANS INCL. IRAS AND OTHER TAX-FAVORED ACCTS |
|
|
PROHIBITED TRANSACTION FOR IRA PURPOSES
|
IMPROPER USE OF IRA BY T/P OR DISQUALIFIED PERSON
BORROWING MONEY FROM IRA SELLING PROPERTY TO IRA RECEIVING UNREASONABLE COMP. FOR MGR OF IRA USING IRA AS SECURITY FOR LOAN BUYING PROPERTY FOR PERSONAL USE WITH IRA |
|
|
ADVERSE CONSEQUENCES OF PROHIBITED USE OF IRA
|
ACCT. NOT AN IRA AS OF FIRST DAY OF YEAR OF TRANSACTION
ACCT. IS TREATED AS DIST. ITS ASSETS AT FMV IF OTHER THAN T/P 15% OF TAX ON PROH. TRANS AND 100% ADDT'L TAX IF NOT CORRECTED |
|
|
TWO TYPES OF TRANSACTIONS NOT PROHIBITED FOR IRA
|
PMTS OF CASH, PROPERTY BY SPONSOR TO T/P OR FAMILY IF PMTS ARE FOR ESTABLISHING IRA OR MAKING ADD'L CONT., IRA IS ESTAB. SOLELY TO BENEFIT THE T/P, SPOUSE OR BEN., TOTAL FMV OF THE PMT IS NOT MORE THAN $10 FOR IRA DEP. LESS THAN $5000, OR $20 FOR $5000+
RECEIPT OF SVCS AT REDUCED OR NO COST FROM THE BANK WHERE TRAD. IRA IS ESTAB. OR MAINTAINED |
|
|
INTANGIBLES
|
SECTION 197 INTANGIBLES ARE CERTAIN INT. ASSETS ACQUIRED AFTER 8/10/93 AND HELD IN CONNECTION WITH BUSINESS FOR 15 YEARS
SALE IS A S1231 GAIN OR LOSS |
|
|
SALE OF GOODWILL
|
SELF-CREATED IS CAPITAL GAIN/LOSS NO COST BASIS
IF ACQUIRED, BEFORE 8/11/93, CAPITAL GAIN/LOSS IF ACQUIRED, AFTER 8/10/93, SALE IS TREATED AS S1231 PROPERTY AND AMT. OF AMORT. CLAIMED UNDER S197 SUBJECT TO S1245 RECAPTURE IF ACQUIRED AFTER 7/25/91 BUT BEFORE 8/11/93, THESE RULES APPLY IF AN ELECTION WAS MADE TO APPLY S197 TO SUCH INTANG. |
|
|
TIMBER
|
HELD AS INV. PROP. IS CAP ASSET
HELD PRIMARILY FOR SALE TO CUSTOMERS IS ORDINARY INC TIMBER OWNED FOR MORE THAN A YEAR, T/P CAN TREAT TIMBER CUTTING AS SALE OR EXCHANGE OR ENTER INTO A CUTTING CONTRACT. TREATED AS S1231 TRANSACTION. FARMERS SELLING TIMBER REPORT ON SCHEDULE F CHRISTMAS TREES OLDER THAN 6 ARE TIMBER.TREE STUMPS ARE CAP ASSET IF THEY ARE ON LAND HELD BY INVESTOR NOT IN TIMBER OR STUMP BUSINESS. GAIN FROM SALE OF STUMPS HELD BY TIMBER OPERATORS IS ORD. INCOME. |
|
|
INVESTMENT INCOME
|
T/P ELECTS TO TREAT NCG AS INV. INC.., ON FORM 4952 INV. INT. EXP. DED. INCOME TAXED AS ORDINARY
|
|
|
RELATED PARTY TRANSACTIONS
|
ORDINARY INCOME IF S1239 RELATED PARTY
|
|
|
HOLDING PERIOD
|
WORTHLESS STOCK - LAST DAY OF YEAR
NONTAX STOCK DIV SAME DAY AS HOLDING PERIOD OF OLD STOCK |
|
|
COMMODITY FUTURES
|
S1256 IS A STANDARD, EXCHANGE-TRADED CONTRACT FOR SALE OF PURCHASE OF FIXED AMT. OF A COMMODITY AT A FUTURE DATE FOR A FIXED PRICE.
S1256 CONTRACT THAT IS OPEN AT YEAR END IS TREATED AS SOLD AT FMV ON LAST DAY OF YR 60/40 RULE-60% LTCG OR LTCL AND 40% IS SHORT TERM |
|
|
OPTIONS
|
CAPITAL GAIN/LOSS
OPTION NOT EXERCISED - TREATED AS A SALE ON EXPIRATION DATE WRITER OF OPTION HAS GAIN OR LOSS DEPENDENT ON WHETHER EXERCISED. IF NO, STCG, AND IF EXCERCISED, GAIN OR LOSS IS SAME AS CALL OR PUT |
|
|
CALLS AND PUTS
|
OPTIONS ON SEC. ISSUED BY WRITERS TO HOLDERS FOR CASH.
ENDED BY EXERCISE, LAPSE, OR CLOSING TRANS. CALL OPTION IS RIGHT TO BUY STATED SHARES AT SPECIFIED PRICE BEFORE EXP. DATE PUT OPTION IS RIGHT TO SELL STATED SHARES AT SPEC. PRICE BEFORE EXP. DATE. HOLDER CANNOT DEDUCT COST, IT IS CAPITAL EXP. SHORT TERM OR LONG TERM DETERMINES TYPE OF GAIN OR LOSS |
|
|
TRADERS IN SECURITIES
|
IN BUSINESS OF BUYING AND SELLING FOR OWN ACCT.
MUST SEEK PROFIT FROM DAILY MARKET MOVEMENT MUST BE SUBSTANTIAL MUST CARRY ON ACTIVITY WITH CONTINUITY AND REGULARITY |
|
|
SHORT SALE
|
T/P SELLS BORROWED PROPERTY TO ANOTHER PARTY. AT A LATER DATE, T/P BUYS SUBSTANTIALLY IDENTICAL PROPERTY AND DELIVERS IT TO LENDER TO CLOSE SALE.
GAIN/LOSS RECOGNIZED WHEN SALE IS CLOSED. |
|
|
INFO RETURNS
|
FORM 1099-B PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANS. IS REC'D WHEN STOCKS, BONDS, CERTAIN COMM. ARE SOLD THRU BROKER.
1099-S PROCEEDS FROM REAL ESTATE TRANS., |
|
|
ALLOWABLE CAPITAL LOSS DEDUCTION
|
LESSER OF $3000 OR CAPITAL LOSS SHOWN ON SCH D LINE 16. REST IS CARRYOVER.
|
|
|
CARRYOVER LOSSES
|
STL ARE USED BEFORE LTL
AMT THAT EXCEEDS LESSER OF: ALLOWABLE CAP LOSS, T/P TAX.INCOME PLUS ALLOWABLE CAP LOSS DED. AND DED. PERSONAL EX. IF DED>GI, USE NEG. TAX INC. FOR COMP. ON DECEDENT RETURN, NO CARROVER ALLOWED BUT LIMIT STILL APPLIES |
|
|
CAPITAL GAIN TAX RATES
|
0, 15, 25, OR 28%
COLLECTIBLES/Q.SM.BUS.STOCK EQUAL TO THE S1202 EXC = 28% UNRECAPTURED S1250 = 25% OTHER GAIN AND REG. TAX RATE IS 25% OR HIGHER = 15% OTHER GAIN, AND REGULAR TAX RATE WOULD BE LESS THAN 25% = 0 |
|
|
COST BASIS
|
AMOUNT INVESTED IN PROPERTY FOR TAX PURPOSES. COST OF PROPERTY IF PURCHASED.
BASIS DIFF THAN COST IF PROPERTY ACQUIRED BY GIFT, INHERITANCE, OR SOME OTHER WAY BESIDES PURCHASE |
|
|
COST BASIS OF AN ASSET INCLUDES:
|
SALES TAX
FREIGHT INSTALL/TEST CHGS EXCISE TAX LEGAL FEES RECORDING FEES/REVENUE STAMPS COMMISSIONS |
|
|
REAL PROPERTY COST BASIS
|
ALLOCATED BETWEEN LAND AND PROPERTY BASED ON FMV
ABSTRACT FEES CHARGES FOR INSTALL OF UTILITY LEGAL FEES RECORDING FEES SURVEYS TRANSFER TAX OWNER'S TITLE INSURANCE ANY AMT. SELLER OWES THAT BUYER ASSUMES |
|
|
SETTLEMENT COSTS - WHAT IS NOT INCLUDED
|
AMTS. PLACED IN ESCROW FOR FUTURE PMT OF EXPENSES, FEES AND COSTS OF GETTING A LOAN, CASUALTY INS. PREM, RENT FOR OCCU. OF PROP. BEFORE CLOSING OR CHARGES FOR UTILITIES AND OTHER SVCS RELATED TO OCCUP. OF PROP. POINTS PAID TO GET A MORTGAGE
|
|
|
CONSTRUCTED PROPERTY COST BASIS
|
COST OF LAND
LABOR AND MATERIALS ARCHITECT FEES BUILDING PERMIT CHARGES PAYMENTS TO CONTRACTORS PMTS FOR RENTAL EQUIP INSPECTION FEES DEMOLITION COSTS |
|
|
INTANGIBLE ASSET COST BASIS
|
COST TO BUY OR CREATE NOT INCLUDING TIME INVESTED BY CREATOR, AUTHOR, INVENTOR
|
|
|
PURCHASE OF TRADE OR BUSINESS COST BASIS
|
WRITTEN AGREEMENT OR RESIDUAL METHOD:
CLASS I CASH CLASS II ACTIVELY TRADED PERSONAL PROPERTY CLASS III ASSETS INC. A/R CLASS IV STOCK IN TRADE, OR INVENTORY CLASS V ALL OTHER ASSETS CLASS VI ALL S197 INTANG. EXCEPT GOODWILL AND GOING CONCERN VALUE CLASS VII GOODWILL AND GOING CONCERN VALUE |
|
|
ADJUSTED BASIS OF PROPERTY
|
INCREASED BY:
CAP. IMPRO. ASSES. FOR LOCAL IMPRO. REHAB EXP REDUCED BY REHAB CREDIT EXP. TO RESTORE PROPERTY THAT SUFFERED CASU. LOSS CERTAIN LEGAL FEES, SUCH AS COST OF TITLE ZONING COSTS DECREASED BY: ENERGY CONS. SUBS. CASUALTY AND THEFT LOSS CREDITS ALLOWED ON PROP DEFERRED GAIN SECTION 179 GAIN EXP. CERTAIN CAN. DEBT EXCL. FROM INCOME REBATES REC'D FROM MFTR. OR SELLER DEPR.. AMORT, DEPLETION VARIOUS NONTAX DIST., SUCH AS NONTAX CORP DIST., OR AMTS REC'D FOR GRANTING EASEMENT |
|
|
BASIS OTHER THAN COST
|
FMV OF PROP. RECEIVED FOR SVCS INCL. IN INCOME AND THEN BECOMES BASIS
|
|
|
RESTRICTED PROPERTY
|
BASIS IS FMV WHEN PROP. BECOMES SUBST. VESTED
|
|
|
BARGAIN PURCHASES
|
FMV BECAUSE DISCOUNT IS INCLUDED IN INCOME
|
|
|
INVOLUNTARY CONVERSIONS
|
IF SIMILAR TO OLD PROPERTY, BASIS EQUAL TO OLD PROP ON DATE OF CONVERSION MINUS LOSS RECOGNIZED ON EXCHANGE PLUS ANY GAIN RECOGNIZED ON EXCHANGE
|
|
|
LIKE-KIND EXCHANGE
|
PROPERTY REC'D IN A TAXABLE EXCHANGE HAS A BASIS EQUAL TO FMV OF PROPERTY AT TIME OF EXCHANGE
|
|
|
PROPERTY SETTLEMENTS
|
NON-TAXABLE
|
|
|
GIFT BASIS
|
DEPENDS ON DONOR'S ADJUSTED BASIS, FMV AT TIME OF GIFT, AND ANY GIFT TAX PAID
IF FMV<DONOR'S AB, DET. DEP. OR GAIN ON DIS. IS OWNERS AB +/- ADJ. DURING OWNERSHIP LOSS ON DIS. IS FMV ON DATE OF GIFT +/- ADJ. DUR. OWN DISP. COULD HAVE NO GAIN/LOSS IF SOLD FOR AN AMT. BETWEEN FMV AND AB IF FMV>AB, RECIPIENTS BASIS IS AB + GIFT TAX DUE TO NET INCREASE IN VALUE PRE-1977 BASIS + ALL GIFT TAX PAID BUT NOT MORE THAN FMV AT GIFT DATE POST-1976 BASIS IS + BY PART OF GIFT TAX PAID DUE TO NET INCREASE AND IS FIGURED BY MULT. GIFT TAX BY FRACTION = NET INC. IN VALUE/AMT. OF GIFT |
|
|
INHERITANCE
|
BASIS IS FMV ON DEATH DATE, FMV ON ALT. VALUATION DATE IF ELECTED, VALUE UNDER SPECIAL-USE VALUATION FOR REAL PROP USED IN FARMING, QUALIFIED WOODLANDS, OR CLOSELY HELD BUSINESSES
DECEDENT'S AB TO EXTENT OF VALUE EXCLUDED FROM DEC. TAX. ESTATE AS A Q CONS. EASEMENT MODIFIED CARRYOVER BASIS AS REPORTED BY ESTATE ON FORM 8939, ALLOCATION OF INCREASE IN BASIS FOR PROP ACQUIRED FROM A DECEDENT FOR 2010 DEATHS |
