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56 Cards in this Set
- Front
- Back
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What are the floors for Medical expenses, and miscellaneous Itemized deducations and casualty losses?
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Medical expenses=10% of AGI, if 65 then $7.5% of AGI
Misc. Itemized deducations =2% of AGI except gambling, investment related, annuity loss and certain estate tax--must consider income earned,i.e. cannot create loss Casualty Loses =10% of AGI. Must result from a sudden, unusual or unexpected event |
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What is deductible on home refinancing and home office expense
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Points must be amortized or 100% if connected to home improvements
Home Office Expense-Employee limited to 2% AGI floor. Must meet principal place and exclusivity tests. Cannot be used to create loss, even if self employed |
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How are prizes and awards treated
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Included in gross income. Awards for religious, charitable, scientific, educational, artistic, literary or civic achievement and turns the proceeds over to a government or charity, the award may be excluded from income.
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What is the two tax treatmentst of withdrawals before the scheduled annuity starting date
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For contracts issued after 8-13-1982, LIFO basis recover, prior to that date can use FIFO
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Who is eligible for the $50K group term life insurance exclusion
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Only EEs 2% S corporation owners are not EEs
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How are social security benefits taxed.
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The second threshold is $34 S $44k MFJ. Taxable SS = the LESSER of
85% of SS OR 85% of Provisional income less threshold Provisional income = MAGI plus 1/2 of SS plus tax free income lst threshold = $25 ad $32 |
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How is the FICA tax computed
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6.2% for ER and 6.2% for EE for OASDI with a base cap of $113,700. Self employed pay a total of 12.4% Also Medicare 1.45% for both ER and EE with no ceiling on earnings. Self employed tp pay 2.9%
In 2013 additional .9 for high incomes |
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How are total self employment taxes computed
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Total tax is 15.3%. When calculating tp reduces net earnings by 7.66 (or multiply by .9235). May deduct the ERs share as a deduction for AGI
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What is the new law in 2013 additional medicare tax
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.9% for tp with a combined income greater than $200 or for couples MFJ $250K S corp not included
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What are some of the items excluded from income
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CAP M WEST WORK
CAP=return of capital; Military; Whole a person; Education scholarships for tuition books and fees; Support for child; Transfers, WORK provided benefits |
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What happens if an insurance policy is surrendered b4 insured's death
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Owner must recognize income to the extent the amount received exceeds the cost basis of the policy. Losses are not deductible
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What is the transfer for value rule for insurance policy and their exceptions
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Except for xfers to insured partner, partnership or corp of insured or xfer to child or someone whose basis in policy is determined by xferor, the insurance proceeds are includeable in income of xferEE to the extent the proceeds exceed basis.
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How are receipts from a viatical settlement treated.
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Amounts received by terminally or chronically ill are excluded from income. Terminally= 24 months to live; chronically=cannot do ADL for at least 90 days. Viatical company will be taxed on profit less premiums at orginary income
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What is a modified endowment contract
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Life insurance issued after 6-21-1988 that fails the 7-pay test--contract is a MEC if the premiums paid during the first 7 years exceed the total of the net level premiums that would have been paid if the policy provided for paid up benefits after the seventh year. Single pay insurance policies are MEC
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What are some of fringe benefits that are taxable
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educational assistance over $5,250, public health club; more than 20% discount of customer services, or GP on property, may exclude $12,970 adoption expense. Note fringe benefits for owners of S corp (more than 2%) are not deductible
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Who claims the exemption when there is multiple support
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If only one of the persons is the child's parent, parent takes exemption, if both persons are the child's parents, it is theperson the child lived with. Ifj neither are parents, person with the highest AGI, If each erson who supported child gave more than 10% of support, there must be an agreement.
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Who does the kiddie tax apply
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A dependent child under 19 or a full time student under 24 with unearned income
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What income is the kiddie tax applied
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Unearned income above >2K is taxed at parents rate
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What is the highest and the lowest marginal tax rate
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10% and 39.6%
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Which filing status has the most favorable tax rate
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MFJ
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What are some of the disadv of MFS
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No credit fr dependent care expenses. If one spouse itemizes, the other generally should itemize because the standard deduction would be reduced to 0
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What is the qualifying widow(er) status
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TP eligible to use qualifying widow with dependent child for two years following the year of death of the spouse
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What are the tests for exemptions
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SAD JC support, age, domicile, joint return, citizenship Qualifying relative SJC and GM gross income must be less than exemption amount. Member of household during tax year
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What are the income adjustments to AGI
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4SE AMISH EDCATOR
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Is termite damage to a house a casualty
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No. It is not sudden nor unexpected Drought related losses are also not considered a casualty.
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What are the phaseout rules for itemized deductions
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The amounts are S=$250K, MFJ=$300K and MFS=$150K. Itemized deductions are reduced by 3% of amount over these thresholdsl.
Reduction is limited to 80% |
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Is interest expense or other expenses related to muni bonds tax deductible
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No because theincome was not taxed.
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When is alimony recapture required
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Only when payments decrease by more than $15K in either the first to second year, or the second to third year.
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If you make a contribution for $200 which includes $100 of free services, how much is yr deductible contribution
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$100. The contribution is the cash less the FMV of what was received in return.
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What biographical info is required to prepare accurate TR
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NBMCC#
3 name, birthdate, marital status, number of children, citizenship |
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What are the three types of TIN
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SSN
ITIN individual TP ID # ATIN Adoption tp ID # |
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When can a tp file a 1040EZ
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Income<$100K, S or MFJ, under 65 and not blind, no dependents, interest<$1.5, no adj or credits except for EIC
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When can a tp file a 1040A
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Income<$100K, , no itemize, no SE
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On what is nonresident alien taxed
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only income from sources within the us and certain income connected with the conduct of a business in the us
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What are the seven progressive tax rates in 2013
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10, 15, 25, 28, 33. 35, and 39.6
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What are three filing deadline exceptions
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declared federal disaster
3 groups of tp with June 15 deadlines: NR alien, C who live o/s us (MUST ATTACH A NOTE INDIcating why qualified) and military while in a combat zone--due 6 mos after leaving combat zone |
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In what situations can relief from joint liabilty
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Innocent spouse relief, separation of liability reflief w 12 mos separation
equitabl relief--if not qualified for the two reliefs above |
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In what situations will an injured spouse claim be made
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refund applied to spouses past financial obligations--must have filed a MFJ
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When would a claim for refund expire
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3 yrs after date original return was filed or two years from the date the tax was paid whicher is later. If extension granted, use extension daat.
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In what situations are expiration dates for refunds extended
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FT-D WS-L Bad debt from worthless security (up to seven years)
payment of accrual of foreign tax NOL carryback and also certain tax credits military disastrs |
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What are IRS' deadlines for assessment and collection
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later of three years from due date of return or date return filed
If substantial understatement of income (25%)=six years no deadline for fraud |
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What is the safe harbor rule for estimated taxes
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100% of tax shown on prior year return or 90% of tax shown on current return
no penalty is tax due is <$1K |
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What are the due dates of estimated taxes
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15 of april,, june, septemer and january
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What are the special rules for farmers and fisherman (2/3 of income comes from farming or fishing activities)
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No est tax if all tax owed is paid by the first day of the third month after the end of his tax year (usually March 1 unless if falls on weekend like 2014)
If est required, must make only one estimate(required annual payment) by the 15 day after end of tax year (1/15)--this annual payment due date not affect ny extensions on return |
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What is the back up w/h rate for items such as interest, wages, royalties or indp conractors
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28%
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How long is the automatic extension to file for individuals
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6 months-10/15
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If a tp files more than 60 days late what is the
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minimum penalty $135 or 100% of tax
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What are some of the features of MFS
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higher tax rates
exemption for AMT ishalf of joint limited credits capital loss deduction=$1.5K SD is half of joint and cannot be claimed if tp spouse itemizes. i.e., both can itemize however |
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Can same sex couplefile single if state of residence does not recognize same sex marriages
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No. only MFJ or MFS
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After filing MFJ, can one change to MFS
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generally no unless changed before due date of return. However exceptions can be made for a decesased tp
However, can change fromn MFS to MFJ |
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Can a tp file as HOH and not claim child as dependent
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Yes--done when divorced custodial tp gives noncustodial spouse right to claim child as dependent. spouse claims dependent, and custodial parent claims HOH
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CanHOH be used by a tp married to a nonresident alien with dependents
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Yes
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What are the income levels for which a t/r must be filed
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S=$10K
HOH=$12,850 MFJ=$20K. 65+ for one spouse=$21.2K; both=$22.4K Qualifying widow with dep child $16.1K or if 65+ $17.9K MFS=$3.9K any age Self Employed=$400 or more or with tips for SE tax |
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What are the tests of a nonresident alien
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green card--substantial presence without a green card==resident (31 days or 183 in current and preceding 2 years)
or exempts or people commuting to us for work. students are exempt from substantial presence test for five years scholars 2 years |
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Explain tax residency through marriage |
a nonresident alien who does not meet the two tests may elect to be treated as a resident for tax purposes if marrieduu to citizen both agree to file a joint return and to treat the nra as a resident |
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What are some of the expenses that are NOT used to calculate cost of maintaining a home
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clothing, education, medical and life insurance
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