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Federal tax prep > Ch 19 - Questions (WI State tax) > Flashcards

Ch 19 - Questions (WI State tax) Flashcards

1
Q

What does Wisconsin allow for social security benefits that were included in federal AGI?

A

Wisconsin allows a subtraction for the amount of ss benefits that were included in federal AGI.

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2
Q

Are Railroad benefits subject to WI state tax?

A

No. They must be subtracted any time these benefits are included in an amount brought from the federal return.

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3
Q

When can taxpayers who were employees of certain federal, state, and local governments, and members of certain retirement systems able to subtract this income from federal income brought into state form?

A

When they meet one of these requirements:
1. Retired before Jan 1, 1964
2. They were an employee and established an account before Jan 1, 1964.
They receive this income as a beneficiary of a taxpayer who met one of the two preceding requirements.

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4
Q

What are qualifying federal retirement systems:

A 
Civil Service Retirement system
Federal Employees' Retirement System (Not Thrift Savings Plan)
Milwaukee city employees
Milwaukee city police officers
Milwaukee firefighters
Milwaukee Public School Teachers
Milwaukee County Employees
Milwaukee Sheriff
Wisconsin state teachers.
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5
Q

Aside from subtracted retirement (ss, medicare, federal), when can some retirement income be subtracted?

A

Low-income seniors may be able to subtract some of their retirement income. They or spouse must be age 65 or older, Federal AGI must be less than $15000/$30000. Must complete the Retirement Income Exclusion Worksheet.

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6
Q

What worksheet is used to calculate retirement income exclusion?

A

The retirement income exclusion worksheet.

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7
Q

How does Wisconsin treat deductions?

A

Wisconsin has a standard deduction based on income and filing status, and then allows a credit for certain additional federal itemized deductions. The credit is available regardless of whether the taxpayer itemized on their federal return.

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8
Q

What do most taxpayers use to calculate their standard deduction?

A

The Standard Deduction Table

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9
Q

How does Wisconsin handle exemptions?

A

Allows the same number of exemptions as Federal. Multiply number of exemptions by $700. With an additional $250 exemption per spouse for age 65+.

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10
Q

How many tax brackets does Wisconsin have?

A

4

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11
Q

What are the Wisconsin marginal tax rates?

A

4% to 7.65%

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12
Q

What do taxpayers use to determine their tax?

A

Tax tables of Tax Computation Worksheet.

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13
Q

What taxpayers use tax tables to calculate their state tax?

A

Taxpayers with taxable income of < $100000.

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14
Q

What taxpayers use the Tax Computation Worksheet to calculate their state tax?

A

Taxpayers with taxable income of $100000+

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15
Q

What are the two categories of credits in the Wisconsin state tax?

A

Refundable and nonrefundable.

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16
Q

Are nonrefundable credits allowed to reduce taxpayer’s tax liability below 0?

A

No, but credit in excess of the tax is carried to a later tax year or lost. Credits that may have excess carried forward are referred to as carryforward.

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17
Q

What are Wisconsin’s nonrefundable credits?

A

Itemized Deduction Credit
Armed Forces Member Credit
Renter’s and Homeowner’s School Property Tax Credit
Working Families Tax Credit
Postsecondary Education Credit carryforward
Water Consumption credit carryforward
Biodiesel Fuel Production carryforward
Film Production Company Investment Credit carryforward
Community Rehabilitation Program Credit
Research Facilities Credit carryforward.

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18
Q

What is the itemized deduction credit on WI state tax?

A

Allows taxpayers to take a credit for certain itemized deductions that can be taken on the federal schedule A, Itemized Deductions.

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19
Q

Are itemized deductions allowed on WI form if taxpayer did not itemize on Federal?

A

Yes. Although they must complete a Federal Schedule A as if they were itemizing Federal, and include it in their WI return.

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20
Q

What itemized deductions cannot be taken as a credit?

A

The portion of medical care insurance that was subtracted from line 11 of Form 1.

The portion of long-term care insurance that was subtracted on line 11 of Form 1.

Contributions and interest allocated to you from a tax-option S corporation, if it was subtracted on line 11.

Casualty and theft losses that are not directly related to a federally-declared disaster.

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21
Q

What does the Itemized Deduction Credit on WI tax equal from Schedule A?

A 
The sum of:
Medical and dental expenses
Interest paid
Gifts to charity
Casualty losses

Minus the taxpayer’s standard deduction, then multipled by 5%.

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22
Q

Where is the Itemized Deduction Credit on WI state tax calculated?

A

Schedule 1 - Itemized Deduction Credit.

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23
Q

How much is the Renter’s Credit?

A

Can be up to $300 (MFJ) or $150 (MFS, HOH). The amount is based on the amount of rent and whether or not heat is included in rent.

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24
Q

What is needed to qualify for the renter’s credit?

A

Rent must be for living quarters that were the taxpayer’s principal residence. It cannot be for property that is exempt from property taxes (such as dorms, certain senior housing, public housing).

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25
Q

What happens on the renter’s credit if the taxpayer lives with individuals that are not the taxpayer’s spouse or dependents?

A

The credit is based on the amount of rent the taxpayer pays, not the full rent.

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26
Q

Where is the credit amount for the Renter’s credit found?

A

On the Renter’s School Property Tax Credit Table.

27
Q

What is the Homeowner’s credit based on?

A

Property tax on primary residence.

28
Q

Where is the credit amount for the Homeowner’s credit found?

A

Homeowner’s School Property Tax Credit Table.

29
Q

What is the Working Families Tax Credit?

A

Low-income taxpayers who file as married filing a separate return may be able to claim.

30
Q

How much is the Working Families Tax Credit worth?

A

Qualifying taxpayers with WI income up to $9000 can take a credit equal to their tax.

Qualifying taxpayers with WI income between $9001 and $1000 will use the Working Families Tax Credit Worksheet.

Income over $10000 do not qualify for the credit.

31
Q

Does WI allow resident and part-year resident taxpayers to claim the credit for taxes paid to another state?

A

yes. If a WI resident earns income that is taxed by another state, the taxpayer may claim the credit for Taxes Paid to Other States.

32
Q

Where is the credit for taxes paid to other states figured on the WI tax?

A

On Schedule OS, Credit for Net Tax Paid to Another State.

33
Q

With what states does WI have a reciprocal agreement?

A

Illinois, Indiana, Kentucky, and Michigan.

34
Q

When may a taxpayer not take the credit for Taxes paid to other states on the WI return?

A

If the income on the taxes is due to wages, salaries, tips, or other personal service income, the taxpayer may not take the credit.

35
Q

What is the Use Tax on WI tax?

A

Taxpayers who purchase items from retailers who do not collect WI sales tax and an exemption does not apply, must pay sales tax on those items if those items are stored, used, or consumed in WI.

36
Q

What is the sales tax rate in WI

A

5.5% except for what is noted on the sales and use tax rate chart, which is based on county.

37
Q

What is the sales tax rate in Milwaukee, Ozaukee, and Washington counties?

A

5.6%

38
Q

What is the sales tax rate in Racine and Waukesha Counties?

A

5.1%

39
Q

What is the sales tax rate for Kewaunee County?

A

5 from Jan 1 through March 31, 2017, and 5.5% thereafter.

40
Q

What is used to calculate the Wisconsin sales and use tax?

A

Worksheet for Computing the Wisconsin Sales and Use Tax.

41
Q

What are voluntary contributions for WI tax?

A 
These contributions are voluntary and affect the taxpayer's refund or amount owed.
Endangered Resources Donation
Cancer Research Donation
Veterans Trust Fund Donation
Military Family Relief Fund
Second Harvest/Feeding America
Red Cross Wisconsin Disaster Relief
Special Olympics WI
42
Q

How may Wisconsin taxpayers make tax payments in various ways?

A

Withholding
Estimated Taxes
Amount Applied from a Prior Year
Payment Made with Extension Request

43
Q

Where is withholding determined?

A

Forms W-2, 1099, or any other information documents that have Wisconsin withholding.

44
Q

When are Wisconsin taxpayers required to make estimated tax payments?

A

If they expect to owe a total amount of income tax of $500 or more after all tax payments and refundable credits are applied.

45
Q

What happens if a taxpayer is supposed to pay estimated payments and does not?

A

They may be subject to penalties.

46
Q

What is the Amount Applied from a Prior Year in WI taxes?

A

Can apply state tax refund to future tax year’s liability. Amount carried to the next year’s return.

47
Q

What is Payment Made with Extension Request in WI taxes?

A

If the taxpayer needs more time to file, they can request a filing extension. This is only for extension for filing, not for paying. the taxpayer should pay their taxes along with the request.

48
Q

What are the refundable credits for WI tax?

A 
Earned Income Credit
Homestead Credit
Eligible Veterans and Surviving Spouses Property Tax Credit
Farmland Preservation Credit
Repayment Credit
Enterprise Zone Jobs Credit
Jobs Tax Credit
49
Q

What is the Earned Income Credit for WI tax?

A

Full-year residents with qualifying children, who are eligible to take the EIC on their federal return can take the WI EIC. The WI credit is equal to a percentage of the federal EIC, based on the number of qualifying children, on a chart/table.

50
Q

Can taxpayers without qualifying children take the WI EIC?

A

No. Must have children.

51
Q

What is the Homestead Credit in WI tax?

A 
A credit for full-year residents who:
Are at least 18 years of age
Are not a dependent (if under age 62)
Did not live in tax-exempt public housing or certain nursing facilities.
Had household income below $24680
52
Q

How much is homestead credit in WI?

A

Up to $1168, depending on the amount of household income and their property tax or rent.

53
Q

Household income in WI includes:

A

Unemployment compensation
Social security and other disibility payments
Railroad retirement benfits
Pensions and annuities
Contributions to deferred compensation plans and other retirement accounts
Interest on US obligations, and state and municipal bonds
Scholarships, fellowships, and grants
Child support and maintenance
State benefit income

54
Q

If a Wisconsin resident a military servicemember, what is their residency?

A

They are considered a WI resident regardless of where they live.

55
Q

What must a military servicemember file if they want to change their legal residence?

A

File DD Form 2058, State of Legal Residence Certificate.

56
Q

Do nonresidents of WI stationed in WI have to pay WI tax?

A

Only on nonmilitary income that is Wisconsin-sourced, unless covered by a reciprocity agreement.

57
Q

What is MSRRA?

A

The Military Spouses Residency Relief Act (MSRRA).

Prevent taxation by multiple states or tax jurisdictions when spouse moves due to military service. Spouse must meet the following requirements:

  1. Spouse accompanies the servicemember to a duty station outside the home state to comply with military orders.
  2. The spouse is in the duty station state solely to be with the servicemember.
58
Q

What is the Armed Forces Member Credit in WI tax?

A

Active duty servicemembers (not Reserve or Nat Guard) may take a credit for military pay received for services performed outside of the United States.

59
Q

How much is the Armed Forces Member Credit in WI?

A

The lesser of $300, or the taxpayer’s qualifying military pay. (Both spouses may take if they both qualify)

60
Q

What is the Eligible Veterans and Surviving Spouses Property Tax Credit?

A

A WI taxpayer who is an eligible veteran or unremarried surviving spouse may take a credit equal to the property taxes they paid.

61
Q

Who is an Eligible Veteran for the Eligible Veterans and Surviving Spouses Property Tax Credit?

A

Meets all the requirements:

Served on active duty in the US Armed Forces

Was a resident of WI either at the time of entry into the service or for any 5-year period after entry into the service.

Is currently a resident of WI

Has a service-connected disability rating of 100%.

62
Q

Who is an eligible surviving spouse for the Eligible Veterans and Surviving Spouses Property Tax Credit?

A

Spouse of a person who meets these conditions:

Service on active duty in the US armed forces.

Was a resident of WI at time of entry into the service for any 5-year period after entry into the service.

Either died while on active duty, or if in the National Guard or reserve, while on active duty or inactive for training purposes or had a service-connected disability rating of 100% at the time of their death.

Receives Dependency and Indemnity Compensation.

63
Q

May taxpayers who claim the Eligible Veterans and Surviving Spouses also claim the Homestead Credit?

A

No.

Federal tax prep (33 decks)

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