Chapter 5 - Gross Income from Employment Flashcards
Foreign taxpayer exclusion
(Qualifying days in the tax year/Total days in tax year) x Maximum annual exclusion amount
Social Security Base Amounts
MFJ - $32,000
All others except MFS - $25,000
MFS $0
Social Security adjusted base amounts
MFJ - $44,000
All others except MFS - $34,000
Single $0
If MAGI plus 1/2 of social security exceed base but not adjusted base then
Social security must be included as lesser of
50% of social security benefit or
50% x [(MAGI + 50% of benefits) - Base Amount]
If MAGI plus 1/2 of social security exceeds adjusted base amount then
Social security must be included as lesser of
85% of social security benefit or
85% x [MAGI + (50% of benefits) - adjusted base amount] plus lesser of 50% formulas or $4,500 ($6,000 MFJ)
MAGI includes
(MFSAS)
AGI before social security benefits plus excluded muni bond interest, excluded foreign earned income and house allowances, excluded US savings bonds interest, excluded adoption assistance, deducted student loan interest
Social security and Medicare tax withholding from wages
6.2% social security employee
1.45% medicare employee
Self employed pay both employer and employee parts total 15.3%
Highly compensated employee
Owner employees:
owners >5% of business or
>$135,000 compensation
Nonowner employees:
>$135,000 compensation
Social security base wage
$147,000
NQSO on exercise date
Ordinary Income on gain. New basis is value on exercise date.
ISO on exercise date
No ordinary income - basis of stock is the exercise price
Provisional income
MAGI + 1/2 social security benefit used to determine is SS is taxable
Group term life insurance premium paid for by employer
Up to $50,000 employee or $2,000 spouse is excludable
