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Accounting 5310 > Chapter 3 Notes > Flashcards

Chapter 3 Notes Flashcards

1
Q

Tax Formula

A

Income-exclusions=Gross Income - Deductions for AGI = AGI - greater of total itemized deductions or standard deduction

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2
Q

Deductions for AGI

A 
Business expenses
50% of self employed
unreimbursed moving expenses
IRA's
fees for college
Health savings accounts
early withdrawal fees
int on student loans
capital loss
alimony
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3
Q

People must itemize if

A
  1. spouse is filing separately and is itemizing
  2. alien
  3. Someone filing a return for less than twelve months
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4
Q

Dependent Standard Deduction

A

Greater of 950 or their earned income plus 300

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5
Q

Personal Exemptions

A

exemptions allowed for the tax payer and the spouse

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6
Q

Qualifying Relative Test

A
  1. Relationship - cousin, relatives, unrelated party if they have lived with them the whole year
  2. Gross Income < 3800
  3. Provide more than half of their support
  4. US Citizen
  5. Can’t file a joint return with someone else
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6
Q

Tax Formula

A

Income-exclusions=Gross Income - Deductions for AGI = AGI - greater of total itemized deductions or standard deduction

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7
Q

Deductions for AGI

A 
Business expenses
50% of self employed
unreimbursed moving expenses
IRA's
fees for college
Health savings accounts
early withdrawal fees
int on student loans
capital loss
alimony
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8
Q

Deductions for AGI

A 
Business expenses
50% of self employed
unreimbursed moving expenses
IRA's
fees for college
Health savings accounts
early withdrawal fees
int on student loans
capital loss
alimony
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9
Q

People must itemize if

A
  1. spouse is filing separately and is itemizing
  2. alien
  3. Someone filing a return for less than twelve months
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10
Q

Dependent Standard Deduction

A

Greater of 950 or their earned income plus 300

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11
Q

Personal Exemptions

A

exemptions allowed for the tax payer and the spouse

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12
Q

Qualifying Child Test

A
  1. Relationship - child, adopted, stepchild, brother, sister, etc.
  2. Abode - lived with you more than half a year
  3. Age -< 19 or < 24 if a full time student
  4. Support - dependent can’t provide more than half of their own support.
  5. US citizen
  6. Can’t file a joint return with someone else
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13
Q

Joint Return Test

A

If a dependent is married and files a joint tax return with their spouse the taxpayer claiming that dependent doesn’t get the exemption

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13
Q

Child Tax Credit

A

Allows 1000 for each dependent under 17

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14
Q

Abandoned Spouse Rule

A

Married people can file separately as the head of household if

  1. Don’f file jointly
  2. Taxpayer paid more than half of house exp
  3. Spouse didn’t live there for more than 6 months
  4. Home is the resident of dependents
15
Q

Singles filing limit

A

if income exceeds 9750(3800+5950)

16
Q

Dependents must file if

A

Gross income exceeds the standard deduction

17
Q

Surviving Spouse Rule

A

Apply for two years following the death of one spouse, if
the surviving spouse maintains a household for a dependent child. The child must
be a son, stepson, daughter, or stepdaughter who qualifies as a dependent of the
taxpayer.

17
Q

Head of Household

A

To qualify for head-of-household rates, a taxpayer must
1.pay more than half the
cost of maintaining a household as his or her home.
2. The household must also be
the principal home of a dependent.
3. The dependent must live in the taxpayer’s house hold for more than half a year

18
Q

Tax Day

A

15th of april

19
Q

Examples of Credits

A

Earned income credit,credit for child and dependent expenses, foreign tax credit, child tax credit

20
Q

Net Worth

A

Assets - Liabilities

21
Q

For AGI deductions

A

Business expenses
Investment Expenses
Misc Exp

22
Q

Itemized Deductions

A

Medical - < 7.5%
Interest
Casualty Losses - 10 % of AGI
Charitable Cont - 50% of AGI

23
Q

Personal Deductions

A

Misc - Unreimbursed

24
Q

Tax Credit

A

Reduces your tax liability

25
Q

Deductions

A

Reduce AGI

26
Q

Innocent Spouse

A

When a spouse files separately even if they lived for part of the year with their spouse. Absolves the innocent spouse from tax liability of a spouses that is doing illegal acts

27
Q

Kiddie Tax

A

Dependent child < 19 or 24 full time student, any unearned income over 1900 is taxed at the highest rate.

28
Q

Effective Tax Rate

A

Average Rate

29
Q

Marginal Tax Rate

A

Rate on your last dollar of income

Accounting 5310 (10 decks)

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