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;
103 Cards in this Set
- Front
- Back
|
explain educator expenses
|
above line
$250 - can be $500 for joint teachers K-12 teacher/couselor/principal/aide who works more than 900 hours |
|
|
explain basics of IRA
limitation eligability |
above line
NOT eligable if rich AND active participant in qualified plan (BOTH HAVE TO BE PRESENT) |
|
|
if spouse is in qualified plan, can wife deduct IRA contributions
|
YES - as long as they are not REALLY rich
|
|
|
what is the limit for traditional IRA contributions
|
LESSER of:
$5,000 OR individual compensation |
|
|
if wife doesn't work, can she still contribute to IRA
|
YES - his income is their income
(provided they aren't rich AND he's active participant in qualified plan) |
|
|
what is the max IRA contribution for married couples provided their income is above this
|
$10,000
|
|
|
what is the catch-up contribution
|
age 50
extra $1,000 |
|
|
what is the limit for IRAs
|
$5,000 - combine ALL IRAs
|
|
|
is there a phase-out for ROTH
|
YES
|
|
|
what is a non-deductible IRA
|
like a ROTH - put money in post tax, earning grow tax DEFERRED, tax on earnings at withdrawal
|
|
|
what is a coverdell education savings account (educational IRA)
|
Like ROTH
NON-deductible ($2,000 limit) tax-free earnings tax-free distributions as long as for education (K-college) money must be distributed by the time billy turns 30 billy has to be under 18 |
|
|
are coverdell IRAs combined with other IRAs to arrive at $5,000 limit
|
NO
|
|
|
what type of IRAs gets above the line adjustment
|
Traditional
|
|
|
what is the limit for the IRAs
traditional catch-up ROTH non-deductible Coverdell |
traditional - 5
catch-up - 1 ROTH - 5 non-deductible - 5 Coverdell - 2 (not combined) |
|
|
explain student loan interest expense
|
above line
limited to $2,500 phase out |
|
|
explain tuition and fees deduction
|
above line
$4,000 income limits not eligible if you take credits |
|
|
explain health savings accounts
|
above line
$3,000/5,950 pretax contributions high deductible plan |
|
|
explain moving expenses
|
above line
new workplace adds 50+ miles to commute 75% (39 week) - must be in new place can only deduct moving costs (travel(.24/mile, tolls, parking) / lodging and moving stuff) |
|
|
what is NOT included in moving expenses
|
meals
pre-move house hunting expense of breaking lease temporary living expenses |
|
|
what is included in moving expenses
|
travel - .24/mile, tolls, parking
lodging moving household goods/personal effects |
|
|
explain tax on self-employment
|
above line
deduct bosses 50% |
|
|
explain self-employed health insurance
|
above line
100% deductible |
|
|
explain KEOGH plans
|
above line
deduct LESSOR of: 49K or 25% net (keogh/self employed) earnings |
|
|
how to calc keogh net earnings
|
NI - 1/2 SE tax - Keogh deduction
25%/125% = 20% of self employment income before KEOGH |
|
|
explain penalty on early withdrawal of savings (interest income) - interest forfeited
|
above line
penalty for CD |
|
|
explain alimony
|
above line
payments must be: legally required in cash cannot extend beyond death child support NOT deductible - payments first apply to child support (dead beat dad) |
|
|
explain property settlements in divorce
|
NOT TAXED - hiDe it
|
|
|
how does the married filing seperately std deduction compare to single
|
SAME
|
|
|
what happens if you're blind or over 65
|
get more standard deduction
|
|
|
what two things increase standard deduction
|
blind or over 65
|
|
|
what itemized deductions DON'T have phase-outs
|
GIMC
Gambling losses Investment Interest Expense Medical Expenses Casualty/Theft Losses (non-business) |
|
|
explain medical expenses
|
itemized deduction
spent on you, spouse, dependent must be paid AND incurred 7.5% AGI floor |
|
|
relating to medical expenses - what part of SUPPORT is NOT tested to prove dependency
|
"U" under a certain level of Income Test and "P" precluded from filing joint return
|
|
|
what things are included in medical expenses
|
meds
doctor medical/accident insurance required surgery transportation physcially handicapped costs |
|
|
what things are NOT included in medical expenses
|
life insurance
capital expenditures health club memberships |
|
|
does a guard rail count as medical expenses
|
in FMV of property increases - NO
in FMV stays the same - YES |
|
|
what taxes are deductible
|
state, local and forgeign
NOT federal |
|
|
can I deduct paying mom's taxes
|
NO - unless I'm on the deed.
taxes must be legally obligated to pay |
|
|
can I deduct property taxes in the year of sale/purchase of home
|
YES - use prorated ownership REGARDLESS of who paid taxes
|
|
|
are taxes paid under protest deductible
|
YES - but subsequent recovery is treated as gross income
|
|
|
are "specials" deductible
|
NO
|
|
|
what 3 types of income taxes are deductible
|
REMEMBER (state, local)
est. taxes paid during year withheld taxes from paychecks assessments paid during year on prior year's taxes |
|
|
explain taxes as a deduction
types, etc. |
itemized deduction
state, local, foreign real estate taxes, income taxes, property taxes and sales taxes |
|
|
can i deduct sales tax
|
YES - must chose between state/local sales tax or income tax
if sales tax - can use either actual sales tax or IRS table PLUS tax on vehicle, boat, etc |
|
|
what types of taxes are NOT deductible
|
FIB
Federal taxes (including SS) Inheritance taxes for states (federal estate pick-up tax) Business and rental proeprty taxes - deduct elsewhere on return |
|
|
explain home interest
|
itemized deduction
1st or 2nd home (buy, construct, substantially improve) $1,000,000 maximum $100,000 HELOC - lesser of $100M or equity (FMV - aquisition indebtedness) |
|
|
explain investment interest expense
|
itemized deduction
like gambling rules limited to net (taxable) investment income muni portfolio won't count - $0 taxable income |
|
|
is personal (consumer) interest deductible
|
NO
|
|
|
what do we do with prepaid interest
|
allocate to proper period - deduct when incurred AND paid
|
|
|
where does education loan interest go
|
adjustment to arrive at AGI
|
|
|
which are deductible
charity gifts political contributions |
ONLY charity
|
|
|
what forms are acceptable for charitable donations
|
Cash or FMV property
|
|
|
what is the limit for charitable donations
overall cash general property LT appreciated property |
50% limit overall
Cash - 50% AGI General property - lesser of basis or FMV FMV property - LT Capital gains - lesser fo 30% AGI or remaining amount to get to 50% |
|
|
what amount is deductible if we receive consideration in exchange for contributions
|
only the amount in excess of consideration
|
|
|
timing for charitable deduction
|
cash - actually paid
credit card - when charged JUST LIKE MEDICAL |
|
|
can someone deduct services donated
|
NO
|
|
|
what is the carryover for charitable donations exceeding limitation
|
5 years
|
|
|
explain casualty and theft losses
|
itemized deduction
10% AGI test must be sudden or unexpected lesser of cost/decreased FMV minus insurance minus $500 minus 10% AGI always pick smallest answer - hard to actually get this |
|
|
explain unreimbursed business expenses
|
itemized deduction
2% AGI test travel 100%, meals 50%, lodging NOT self-employed |
|
|
explain educational expenses
|
itemized deduction
2% AGI test those NOT deducted above the line maintain/improve skills needed in job meet requirements to retain job CAN'T deduct if NOT to meet minimum job requirements or if they qualify for NEW job |
|
|
what are some other 2% AGI itemized deductions
|
uniforms
business gifts business use of home employment agency fees expenses of investors - safe deposit box/advice subscriptions to professional journals tax prep fees |
|
|
explain gambling losses
|
itemized deduction
only deductible to extent of gambling winnings no AGI floor |
|
|
what are the adjustments to arrive at AGI
|
educator expenses
business exp of reservists, performing artists and fee-basis gov't officials HSA moving expenses 1/2 SE tax Self-employed SEF, SIMPLE Penalty on early withdraw of savings Alimony IRA deduction Student loan interest Tuition and fees Domestic production activities |
|
|
what is a reduced rate 15% / 0% provided for
|
qualified dividends
LT capital gains |
|
|
what is the main difference between personal tax credits and refundable credits
|
personal tax credits bring down income only to 0
refundable credits can result in getting money BACK |
|
|
what are the types of refundable credits (get money from gov't)
|
child tax credit
earned income credit withholding taxes (w-2) excess SS paid LT unused minimum tax credit hope scholarship (40%) making work pay credit |
|
|
explain child and dependent care
|
credit
20-35% of eligible expenses 3M per dependent/max of 6M what qualifies child under 13 disabled dependent disabled spouse eligible expenses babysitter nursey school day care |
|
|
does grammar school qualify under child care credit
|
NO
|
|
|
how to calc child and dependent care credit (20-35%)
|
3M per dependent/6M max
6M x 20% = 1,200 credit |
|
|
explain credit for elderly and/or permanently disabled
|
credit
have to be either 65+ or retired due to permanent disability credit is 15% of income after backing out SS and 1/2 income over threshold |
|
|
explain hope scholarship
|
credit
multiple kids are ok max 2,500 (100% of 2M, 25% of next 2M) tuition/fees/books for 1st 2 years of college |
|
|
explain lifetime learning
|
credit
2M max per year 20% of expenses NO books can only take 1 per year regardless of # of kids |
|
|
are books a valid expense under the hope and lifetime credit
|
Hope - YES
Lifetime - NO |
|
|
can you use both the hope and lifetime credit in the same year
|
YES
|
|
|
position on tax return
educator expense educational expenses hope lifetime |
educator expense - above line
educational expenses - itemize hope - credit lifetime - credit |
|
|
does the educator expense have an AGI phase-out
|
NO - teacher are broke
|
|
|
explain adoption
|
credit
12,150 reasonable expenses Carol DOESN'T qualify medical expenses DON'T qualify |
|
|
explain retirement savings contribution credit
|
credit
low income over 18, not a student AND not a dependent either a ROTH of traditional |
|
|
explain foreign tax credit
|
can take as credit instead of itemized
lesser of: taxes paid OR % of foreign income x US tax rate |
|
|
what is the carryover rules on foreign tax credits
|
back 1 forward 10
|
|
|
explain work opportunity
|
credit for employers
40% of 1st 6M 1st years wages qualifed groups handicapped 18-24 poor vietnam veterans food stamp recipients |
|
|
explain child tax credit
|
credit
1M CARES rules apply but child must be under 17 (19/24 age doesn't apply) |
|
|
what type of credit is the earned income credit - personal or refundable
|
refundable
|
|
|
when does excess SS happen and what happens then
|
2 employers in 1 year - both take SS out
get it back as a refundable credit |
|
|
what type of credit is withholding tax (paycheck credit) - personal or refundable
|
refundable - get it back
|
|
|
what is the exemption formula for AMT
|
exemption (70,950J)
- ((AMTI - 150M)x25%) take AMTI - 150M take that times 25% subtract that from exemption |
|
|
how is AMTI calculated
|
taxable income +/- Adjustments + Preferences
|
|
|
What are the AMT adjustments
|
PANIC TIM and ME
Passive activity losses Accelerated Depr (post 86) NOL (individual) Installment income of dealer Contracts (2 types adjustment) Tax "deductions" (taxable refunds) Interest on HELOC Medical deductions (must exceed 10% rather than 7.5%) Misc deductions not allowed (all the 2% stuff) Exemptions and Standard Deduction |
|
|
What are the tax preferences for AMT
|
Private activity bond interest
Percentage depletion the excess over adj basis Pre 87 accelerated depreciation |
|
|
what (adjustments or preferences) are +/- and what is +
|
adjustments +/-
preferences + |
|
|
can AMT paid be used to offset tax, which type and what is the carry forward rule
|
YES
only regular tax (NOT AMT) carryforward forever |
|
|
what are the AMT credits
|
FACCE it, these are allowed
Foreign tax credit Adoption credit Child tax credit Contributions to retirement plans Earned income credit |
|
|
when is the statute of limitations
|
GR
3 years from the later of: due date filed date |
|
|
haven't filed 1999 tax return - are we ok since the statute is only 3 years
|
NO - clock hasn't started yet - 3 years from later of due or filed
|
|
|
when is the statute of limitations adjusted and what is it adjusted to
|
when there is a 25% understatement of gross income
then it's 6 years from the later of: due date filed date |
|
|
what is the statute of limitations on fraud/false tax returns
|
NO statute - statute only in place for good faith
|
|
|
what is the statute of limitations for bad debts/worthless securities
|
7 years from later of:
due date filed date 7 years - bad luck "bad debt/securities" |
|
|
when is a tax payer required to make quarterly payments
|
BOTH
$1M liability expected AND withholding less than lesser of 90% of current tax or 100% last years tax |
|
|
when is a penalty NOT due for failure to pay estimated taxes
|
when tax liability is under $1M
|
|
|
which adds to taxable income:
citizen award for good deeds poet award with no work required |
Both - GR - all awards and prizes are counted in income
|
|
|
if individual receives 2010 rent in December 2009, what amount is income
|
GR - individuals recognize income in year money received regardless of what year it's tied to
|
|
|
Are the following taxable:
fee from jury duty gift from girlfriend over $12M treasury bond interest muni interest child support alimony |
fee from jury duty - YES
gift from girlfriend over $12M - NO treasury bond interest - YES muni interest - NO child support - NO alimony - YES |
|
|
what are the 2 times points on a mortgage can be itemized
|
1 - home aquisition mortgage (new home)
2 - home equity loan (to improve property) otherwise, amortized and deducted |
