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40 Cards in this Set
- Front
- Back
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Interest Income |
Is a form of income that may be earned from deposits such as a bank account, or bond.
Some is taxable and some is not taxable |
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What for is interest income generally reported on? |
Form 1099 - INT |
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When is a taxpayer no longer able to report interest income on 1040ez |
when is exceeds $1,500 |
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What is the interest from from US treasury obligations taxed by |
is taxable for federal income tax purposes |
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Series EE Bonds |
Most common type of US Bond
Issued at discount at the "interest income" is the full amount paid at maturity
Can be used for the education expense exclusion |
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Series I Bonds |
Issued at face value with a period of 30 years
face value and accrued interest is paid at maturity
Can be used for the education expense exclusion
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Interest is recognized in two ways for EE or I Bonds |
either at cash in
or
Each year as the Bond Value increases
What ever is elected is must stay that way
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Series HH |
Issued at face value and pay interest twice a year |
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What bonds can taxpayers purchase and redeem on a tax-free basis to pay for qualified higher education |
Series I and Series EE |
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What is the phase out amount for the education interest exclusion for MFJ and QW |
AGI $112,050 - $142,050 |
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What is the phase out amount for the education interest exclusion for MFS |
Do not qualifiy for education saving bond interest exclusion |
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What is the phase out amount for the education interest exclusion for Single and HOH |
AGI $74,700 - $89,700 |
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What form is Education savings bonds interest exclusion calculated on |
Form 8815 |
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What three rules must be followed in order to qualify for the education savings bonds interest exclusion |
1. Must be purchased by owner
2. Qualified expenses must be reduced by certain tax free benefits by expenses used to claim education credits
3. Total interest received may only be excluded if the principle + interest < education expenses |
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How to calculate the interest deduction when using a saving bond to pay for education expenses |
= (Interest x (Expenses / Principle + Interest) |
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For deposits less then 5000 when is a gift taxable as interest for opening up a new account |
more that $10 |
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For deposits of 5000 or more when is a gift taxable as interest for opening up a new account |
More than $20 |
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What kinds of rewards are taxable interest on opening new accounts |
Cash reward points Airline Miles |
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Debt obligations from state and local governments is not taxabe by |
Federal Income tax |
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where is tax exempt interest reported on Form 1040 |
Line 8b |
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What form is dividend income reported on to the taxpayer |
Form 1099 - DIV |
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When can Dividend income be reported on form 1040 or 1040a |
when it is $1,500 or less
if not it is reported on Schedule B |
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Are dividends subject to employment taxes |
no |
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Ordinary Dividends |
Are cash instead of property or more stock and are paid out of earnings and profit
Taxes at ordinary income |
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What box on form 1099 -DIV is Ordinary dividends reported in |
Box 1a |
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nondividend Distibution |
Not paid out of earning and profits.
Considered a return on capital thus reducing basis
If basis reduced below 0 then capital gain is recognized |
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Qualified Dividends |
These are ordinary dividends that get special tax treatment if certain criteria are met |
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What box are qualified dividends reported in |
box 1b |
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Qualified Dividends are subject to a 15% tax rate when |
regular tax rate is 25% or higher |
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Qualified Dividends are subject to a 0% tax rate when |
Regular tax rate is below 25% |
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What is the criteria for a dividend to qualify as a qualified dividend |
- must be paid by US corp or qualified foreign corp
- held the stock 60 days during the 121 days that begins 60 before the ex-dividend date |
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ex-dividend date |
Date after a dividend is announced |
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What is the holding period for a stock |
All days held plus the day it was sold the date bought is not included |
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What type up of from us given to the taxpayer receives mutual fund distribution |
Form 1099-DIV |
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Mutual fund distributions are reported based upon |
the charicter of the income source |
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How are mutual fund capital gains distribution taxed |
treated as long term regardless of holding period |
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Mutual fund distributions may be reported on |
1040 and 1040A not 1040EZ |
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If a dividend is declared on october, november, and december but not paid out until after when is the dividend considered received |
on December 31st |
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Stock Dividend |
Distribution of stock instead of cash
not taxable but does reduce the basis on a per stock level
if cash option is given then it is taxable event at FMV
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Constructive Distribution |
Between Corp and shareholder - these events considered distributions and taxable
- Payment of personal expenses - Unreasonable compensation - Unreasonable rents - Cancellation of a shareholder's debt - Property transfers for less then FMV - Below market or interest free loan |
