Help
Options
Question
Schedule A
click to flip
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't know
Question
Schedule B
Remaining cards (106)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
TAX- Indiv 1
| Question | Answer |
|---|---|
| Schedule A | Itemized deductions of (personal expenses) (below AGI) (COmMITT) (if your an employee) C- Charitable contributions Om-Other misc. M- Medical ex I- Interest T- Taxes T- Theft or casualty loss (disasters only) |
| Schedule B | Interest & Dividend income |
| Schedule C | Profit and loss from a business (Employer expenses / 1099 Income) (if you are the employer) - If you have a unincorporated business |
| Schedule D | Capital gains and losses (S/T and L/T investments) |
| Schedule E | Supplementary income or loss (RRF-COP) •Rental Income •Royalties(Copyrights Oil/Gas leases Patents) •Flow-through entities (Schedule K-1 income) S corps, Partnerships, Estates & Trusts |
| Schedule F | Profit and Loss from Farming |
| For AGI adjustments (before AGI) | (I EMBRACED + HSA + Farm Income) Int on student loans- $2500 Employment tax(50%), Med premiums(100%) Movingex(military) Bus ex rent & royalties Alimony(grandfather only) Contributions to retirement Early withdraw Penalty D= Jury duty pay |
| When should an individual file a tax return? | if their income is greater than their standard deduction, have net self employed income of $400 or more, are claimed as a dependent on another individual return & have income more than the dependent standard deduction($1,100 in 2019), if earned income X |
| How is income recorded for tax purposes | Cash + FMV received |
| Life insurance premiums taxable? | When employers pays $50,000 or less for an employees life insurance plan the premiums are tax free. EX: if employer pays $75000 in life insurance & the premiums are $300 then $100 of premiums are taxable income for employee (25/75=1/3*300=100) |
| Stock options | Non-qualified or Qualified Non-Qualified(Not qualified for any kind of special deal so taxable when exercised) Qualified (ISO incentive stock option- taxable not when you exercise stock but when you sell stock unless an AMT trigger) |
| Is your state tax refund taxable the next year? | If U itemized last yr then your refund is taxable. If you didn't itemize last yr then your refund isn't taxable this yr. BC if U itemize it is considered a benefit if you don't itemize it's not considered a benefit U R just getting the $ U overpaid back |
| State tax refund form name | Form 1099G |
| Federal tax refund taxable this yr? | No, its just a refund of your own money |
| What is a capital asset? | any asset that isn't an ordinary asset or business asset. Ordinary assets- ordinary assets of a bus. Ex: bought & sold art work this would be considered a gain on capital assets bc its not apart of bus, inventory, or apart of the LT concurrent bus assets |
| Long term capital gain | gain on asset held greater than one year |
| Gain on asset held for 1 year or less | Ordinary gain |
| Net Capital losses - How much can we deduct per year? | allowed to deduct $3000/yr & can roll forward indefinitely |
| 1120X | Amended individual tax return |
| NOL(Net Operating Loss) | Is the net loss of individuals net income and net business income/losses. We can't carry loss backwards but we can carry loss forward indefinitely to offset income |
| For NOL- include all taxable income & all deductions except: (therefore may have to add these specific items back to loss to calc actual NOL) | Int, Divs, Capital loss in excess of capital gains, Non bus deductions in excess of bus income(ex; standard deduction), NOL carry forwards, SEC 199A Qualified bus Income deduction, or personal exemption |
| Supplementary income or loss (RRF-COP) | - RRF=(rent, royalties,Flow thrugh) COP(types of royalties(copyright, Oil/Gas leases, Patents) |
| Form 1040X | Amended return (3 years) |
| Form 1116 | Foreign Tax Credit |
| Form 4562 | Depreciation and Amortization |
| Form 4797 | Sale of L/T business property (not inventory or receivables – Schedule C)- (If we sold items on the 1231- non current business assets) |
| Schedule SE | Self employment taxes |
| 1231 | non current business assets |
| Student Loan interest | Is an "above the line" "adjustment to" AGI. $2500 phase out applies |
| Self employment Tax | Is an "above the line" "adjustment to" AGI. pays both employer and employee’s share (15.3%) - 50% of SE tax (7.65%) is deductible on return -6.2% Social Security - on wages up to $132,900 – 2019 1.45% Medicare – unlimited -100% of medical insurance pre |
| Self employment Tax CONT. | |
| If rental Income is full time job | Income/deductions captured on Schedule C |
| If rental Income is more of a passive activity | Income/deductions captured on Schedule E |
| Flow through entities | Schedule E (Individuals rec. K1)- K1 income gets taxed at individual rates |
| The deduction for state and local income and property taxes paid is limited to a total of? | $10,000 ($5,000 MFS) for 2018 through 2025 |
| Fees, Fines, Federal, FICA | Not Tax deductible |
| Theft & Casualty Losses, how much is deductible / Itemized? | (Loss is measured by drop in FMV) minus: insurance reimbursements, $100/ event, & 10% of AGI |
| Child Tax Credit | up to $2,000/qualifying child under age 17, tax credit is phased out by $50 for each $1,000 by which the taxpayer’s MAGI > $400,000 on a joint return, or $200,000Single, can also collect |
| Child Tax Credit for (Qualifying child & Qualifying relative) | $500 credit for other dependents(Qualifying child & Qualifying relative) |
| Child Tax credit refundable? | If tax liability isn't big enough to claim(use up/deduct) the child tax credit up to $1400(per qualifying child) can be refundable |
| Child & Dependent Care credit | for a child < age 13 or a disabled dependent. The credit is based on the smallest of 3 amounts: 1.)Actual dependent care ex. 2.) Earned income 3.) $3,000 (for care of one dependent) or $6,000 (for care of multiple dependents) *subject to phase outs |
| Adoption Credits | (for child under 18 yrs old) The credit is limited for 2019 to the first $14,080 of costs. Credits exceeding the tax liability may be carried forward up to 5 years. Phaseout exists. |
| Education credit- (PMTS tuition/fees) Hope scholarship credit (renamed the “American Opportunity Tax Credit”— AOTC) | per each child, applies to 1st 4 yrs of college, The credit is equal to 100% of the first $2,000 and 25% of the next $2,000 in payments, for a maximum credit of $2,500 per student, 40% of the credit is also refundable ($1,000) |
| Education credit- (PMTS tuition/fees) lifetime learning credit | 4 any yr of education , the credit is equal to 20% of the first $10,000 paid on behalf of all family members, for a maximum credit of $2,000 per family. |
| Education credit | Can only take one of the credits either American Opportunity Tax Credit(per individual) or lifetime learning credit(per family) per kid *also can't be MFS* |
| Saver’s Credit | credit is up to $1K($2K MFJ) for making contributions to IRA /retirement plan. claimed by: -MFJ income up to $64K HH income up to $48K, Single & MFS income up to $32K in 2019. The amount of the credit can range from 10-50% of the amount of contribution |
| Credit for the elderly or disabled | credit 4 the elderly/disabled is available only to those age 65 & older or those who R retired on permanent & total disability. individuals must have AGI < $17.5K (or $25K MFJ if both spouses qualify) & nontaxable S.S or < $5K ($7.5K MFJ) taxable S.S |
| Earned Income Credit (EIC) | -Refundable credit, *If investment income is > $3,600 for 2019, the credit is denied, |
| Increased Medicare Tax Rate (HI rate) for High-Income Earners | rate is inc. by 0.9% for indiv earning in excess of income ($250,K MFJ & $200Kothers) 4 employees, the new rate is 2.35% (1.45% + 0.9%) on amounts in excess income 4 self-employed indiv, rate is inc. from 2.9% to 3.8% on amounts in excess of income levels |
| Surtax on Unearned Income | if U have unearned income of indivs, estates, & trusts, the surtax is 3.8% of the lesser of: net investment income or The excess of MAGI over the threshold amount ($250K 4 MFJ/SS), $125K 4 MFS), & $200K 4 all others)*Lessor of the 2#'s*3.8%=Surtax |
| MADI | |
| Employee discounts/ services purchased by employees- considered income? | In general, employee discounts do not result in taxable income to the recipient. The amount that may be excluded in relation to services purchased by employees, however, is limited to 20% of the amount normally charged to nonemployee customers. |
| Taxpayers required to use the accrual method are | tax shelters, C corps & partnerships that exceed the $25M gross receipts test. The accrual method is also required 4 entities that exceed the $25M threshold 4 both gross receipts & inven; cost capitalization or LT contracts R prominent N Calc entity's N/I |
| A distribution from a qualified profit-sharing plan is excluded from income to the extent that it is | transferred to an eligible retirement plan, such as an IRA, within 60 days |
| State tax refunds are generally included in gross income if the taxpayer itemized deductions in the prior year and took a deduction on Schedule A for state taxes paid. The amount included in income in the current year is limited to | the smaller of the amount by which total itemized deductions exceeded the standard deduction in the prior year or the amount of state taxes claimed as a deduction. |
| If the personal use of a dwelling unit held out for rent exceeds the greater of 14 days or 10% of the days rented, the unit is considered a home. | If a home is rented for less than 15 days during the tax year, the rental income is excluded from gross income and the rental expenses are not deductible. |
| The profit or loss from operating a sole proprietorship is fully deductible with certain limitations. | If the operation did not yield a profit in at least 3 of the preceding 5 years, it generally is considered a hobby rather than a business and losses are not deductible. |
| The business deduction for promotional items is limited to | $4 per item |
| How may taxes paid by an individual to a foreign country be treated? | Foreign taxes can either be taken as an itemized deduction or be treated as a credit against federal income taxes due. |
| the special considerations for Code Sec. 1244 stock | In general, a decline in value of Sec. 1244 stock is considered an ordinary loss up to $50,000 ($100,000 for married filing jointly). However, to receive the ordinary loss treatment, the stock must be sold by the original purchaser. |
| The deductible contribution to a Keogh plan by a self-employed taxpayer is limited to | 25% of income from SE after subtracting the contrib. If have income from SE of $225K before -the contribution, & if we call the contrib. amount X, the equation becomes X = 25% ($225K–X) "*" both sides of the equa by 4 will give 4X = $225,000–X, or 5X = $2 |
| Premium on disability insurance policy | is not a deductible medical expense |
| Contributions to a Roth IRA are not deductible | |
| A corporation can use the cash basis method of accounting if it meets the | $25M gross receipts test. but doesn't apply 2 farming bus. & qualified personal service corpors(PSCs), where 95% of stock is owned by owner-employees (i.e., ownership test) and 95% of activities R N certain fields, such as health, law, acct, etc. (i.e., f |
| would be subject to self-employment tax by a farmer? | Gains on the sale of livestock raised for sale, A farmer is in the business of growing livestock, produce, or grains for sale. Profits are considered earnings from self-employment |
| How to include barter/services as income? | FMV of service rec. (even if bartering still include FMV of service or product rec. as income) |
| A taxpayer may file a tax return as a qualifying widow or widower for 2 tax yrs after the yr in which a spouse dies | provided the couple qualified to file a joint return for the yr of death,taxpayer provided over 50% of the cost of maintaining the principal residence of a dependent child or stepchild& taxpayer hasn't remarried as of the end of the current yr. |
| tax treatment of a business’s research and experimental (R&E) expenditures | Companies generally prefer to expense R&E costs immediately, but may elect instead to defer and amortize such costs over a minimum of 60 months |
| Portfolio income | most interest, dividends, annuities, royalties, gain from disposition of property that produces portfolio income |
| Losses on the sale of 100% personal-use property(home) are generally not deductible; thus, the loss on the sale of the principal residence is disallowed. | |
| Non-qualified stock options are taxable when | they are exercised, in an amount equal to the difference between the stock’s selling price and the option price. |
| Gertie owns an apartment building. Out of the rents received each month, she pays herself a management fee. Where should she report her income? | Gertie’s rental income is reported on Schedule E, as is the deduction for the management fee. Her management fee income is properly reported on Schedule C as business income. |
| The general business credit is designed to | combine several tax credits: the low-income housing credit, the alcohol fuel credit, & the targeted jobs credit. The purpose of the combination is 2 provide uniformity related 2 the deduction of the credit 4 the current, carryback, & carryover yrs |
| Under the 12-month test, a cash-basis taxpayer may deduct prepaid expenses in the year they are paid only when the prepayment creates a right or benefit that does not last beyond the earlier of: | 12 months, or the end of the tax year following the year the payment was made. |
| Short-term capital losses may be used to offset | long-term capital gains, and would offset the gain taxed at the highest rate first |
| A married couple may file a return as married filing jointly only if | they use the same accting period, although they may use diff acct methods. While a couple generally can't file a joint return if either is a nonresident alien @ any time during the tax yr, if 1 of the spouses is a U.S. citizen or resident of the U.S, an e |
| Wages and interest on U.S. Treasury obligations, other than Series EE U.S. savings bonds used to pay qualifying higher education expenses, are included in gross income. | |
| Awards worth up to $400 received from employers for years of service or achieving safety objectives are not taxable | |
| Under pmt penalties | An indiv is subject to an underpayment penalty if the bal. of tax due is > $1K The penalty may also be avoided by paying the lesser of 90% of the current yr tax liability or 100% of the prior yr tax liability (110% if the current yr tax income is over $15 |
| Under TCJA, gambling expenses are deductible, except for 50% of meals, even for a non-professional individual gambler(losses are deductible up t gambling winnings) | |
| A C corporation that has more than $25 million in sales on average for the 3-year period ending with the tax year must use the accrual method. | |
| Service businesses with gross receipts of $10M or below may use the cash basis. | This includes most individuals, S corporations and individually owned partnerships. |
| safe harbor | 2 avoid underPMT penaly, a taxpayer must pay a safeharbor $ PMT rule t is 100% of the prior yrs tax liab oR90% of the current yr tax liab(whichever is lower), if INDIV AGI is > $150K in the prior yr, safe harbor amount incs to 110% of prior yrs tax liab. |
| How to include employee service discounts | |
| AMT credits may be carried forward to future tax years. | |
| A gain on the sale of the taxpayer's personal residence is eligible for an exclusion from gross income if the taxpayer owned and used the home as his or her personal residence for two of the five years prior to the sale. | For qualified single individuals, the exclusion from gain is $250,000. In this case, the realized gain is $300,000 ($450,000 sales price – $150,000 cost). $250,000 is exempt from income tax, and $50,000 would be taxable as a capital gain. |
| payments made by an employer on behalf of an employee for an employee's educational expenses | Up to $5,250 may be excluded from gross income for payments made by an employer on behalf of an employee for an employee's educational expenses. Therefore, $5,250 of the $8,000 reimbursement is nontaxable and $2,750 is taxable. |
| Interest on Series EE Savings Bonds(education bonds)is tax-exempt when these certain conditions are met: | -int. used to pay for tuition/expenses -eligible higher education ex are reduced by tax-free scholarships -the tax payer over age 24 when int. issued -the bonds are acquired after 1989 -the int. exclusion is subject to phase-out |
| Exemption of 10% penalty when taking a distribution for IRA if following are met: | -older then 59.5 -has rec. 12week unemployment comp & uses money to purchase medical insurance, pay for college if in schol half time for tuition, fees, book, equipment ex - first time home(10,000) -medical ex in excess of 10%AGI - |
| The deduction for business interest expense is limited to | 30% of adjusted taxable income, which is taxable income excluding interest income, interest expense deduction, and depreciation deduction. |
| The IRC defines gross income as | "all income from whatever source derived." There must be statutory authority provided in the IRC for a taxpayer to exclude an item from gross income, such as compensation for physical injuries and workers' compensation awards. |
| Section 104(a) of the IRC specifically excludes from gross income | damages rec. 4 personal physical injury/physical sickness. This exclusion applies 2 court-awarded damages as well as 2 workers comp. |
| State sales taxes are deductible in lieu of | state income taxes |
| To qualify as married filing jointly (MFJ), taxpayers generally must: | -Be married -Agree to file a joint return -Have the same tax year -Be either U.S. citizens or resident aliens (eg, green card holders) -for the entire tax year |
| Can MFJ couples can file together if they have diff. accounting methods | yes |
| Can MFJ couples can file together if they have diff. Tax years? | no |
| Pension benefits | are taxable except to the extent that they are considered a return of capital. |
| A penalty for early withdrawal of funds from a certificate of deposit | is actually a reduction in the interest earned. As a result, it is a deduction for AGI deducted on Page 1 of Form 1040. |
| Union dues | are considered an employee expense and are not deductible for 2018 to 2025. |
| Funeral expenses | are considered a personal expense under IRC §262 and are thus not deductible on individual income tax returns. Note: Funeral expenses can be deducted on an estate tax return in determining the taxable estate if such expenses were paid out of the estate. |
| If income earned by a decedent is reported on the income tax return of the recipient, | an itemized deduction may be taken for federal estate taxes paid on that income without limitation. |
| the credit for the elderly or disabled was intended for low-income taxpayers; | Low income tax payers = MFJ AGI exceeding $25K will be not et the disabled credit even if both taxpayers are disabled |
| AMT credits may be carried forward to reduce | regular tax liabilities in later years, but not alternative minimum taxes. |
| Regulation §1.262-1(b)(2) specifies that homeowner's insurance on a principal residence is an example (ex: premium for homeowner's insurance policy on principle residence) | of a personal expense that is not deductible. |
| continuing education courses and was not reimbursed by her employer. | Not deductible on 1040 |
| In a multiple support agreement(ex: children provide combined support for mom or dad)- who can claim parent as dependent? | all must be qualifying relatives who together contribute more than 50% of the support of the dependent. In addition, a contributor must have provided more than 10% of the individual's support to claim the individual as a dependent. |
| An employee who has had social security tax withheld in an amount greater than the maximum for a particular year may | claim the excess as a credit against income tax, if that excess was correctly withheld by two or more employers. |
Created by:
tiffany17ann