Individual Tax - Adj & Itemized Deductions Flashcards
Adjustments include:
educator expenses IRA; student loan interest tuition and fees health savings account (HSA) moving expenses ½ self-employment taxes self-employed health insurance self-employed retirement early interest withdrawal penalty alimony other, less frequent adjustments.
Adjustments term
adjustments to gross income adjustments to arrive at AGI deductions to arrive at AGI deductions for AGI above-the-line deduction
Educator expense
(K–12th grade, up to $250 qualified expenses). Expired 12/31/13
Individual Retirement Accounts
$5,500 in 2014
A nonworking spouse can also contribute and claim full amount even if no earned income (based on working spouse’s earnings).
Roth IRA
are nondeductible distributions are tax-free $5,500 contribution limits apply no plan participation limitations Phase-out = Single $114,000–$129,000; MFJ $181,000–$191,000 MFS $0–$10,000.
Nondeductible IRAs
5,500 contribution limits
only earnings are taxable upon distribution
return of capital is tax-free
proration is necessary
Note the $5,500 contribution limit is aggregated so the maximum IRA contribution for any taxpayer is $5,500 or $11,000 MFJ.
Coverdell education savings account
are not deductible
distributions are tax-free if used for qualified education.
$2,000 maximum contribution per beneficiary
phase out for higher AGIs—Single $95,000–$110,000 and MFJ $190,000–$220,000.
Student Loaan interest
Limited to $2,500 and
phased out—Single $65,000–$80,000
MFJ $130,000–$160,000
dependent cannot claim this adjustment.
Tuition and fee deduction
$4,000
not allowed for expenses also claimed as Hope credit, lifetime learning credit or nontaxable savings accounts,
eliminated at higher AGI levels—
Single $65,000–$80,000;
MFJ $130,000–$160,000. Expired 12/31/13.
Health Savings Accounts
Must be combined with high-deductible health insurance, make pretax contributions of up to $3,300 for 2014 ($6,550 for family), money to be used on health care costs; few definitions or limitations on “health care.
Moving expenses
New workplace 50 miles farther from old house than old workplace
39-week stay (first 24 months)
self-employed 78-week stay (first 24 months)
direct moving costs of self and family only
travel, lodging, transportation (people and household goods), personal auto, tolls, parking.
No deduction for pre-move “house hunting,” expense of breaking a lease, or cost of temporary living expenses.
Adjustments
½ Self-employment FICA tax.
Adjustments
Self-employment retirement.
Adjustments
Early interest withdrawal penalty (forfeited interest on CDs).
Alimony
Deductible if paid pursuant to divorce or legal separation, is income to receiving spouse, child support portion “not” deductible, if parent is behind on payments, the payments first apply to child support.
