Chapter 7: Tax computation and Credits Flashcards
(13 cards)
How do you calculate the Medicare Contribution Tax on Net Investment Income?
3.8% of the lesser of 1) Net Investment Income or 2) the difference between Modified AGI and the Threshold
Threshold: $200,000 ($250,000 mfj, $150,000 mfs)
What is the standard deduction for a dependent?
Greater of $1000 or $350 + earned income up to $6100
What is the standard deduction extra amount for the blind and people at least 65 years old?
1500 for each person/each qualification.
How do you determine the Kiddie Tax base?
Lesser of net unearned income - 2000 and taxable income.
How much is taxed at the child’s rate?
The difference between the taxable income and net unearned income - 2000.
What four itemized deductions are also deductible for AMT purposes and therefore do not need to be adjusted for AMTI?
Casualty and theft loss
Charitable Contributions
Home mortgage interest Expense
Gambling Losses
How do you calculate the AMT?
AMT base (AMTI) multiplied by 26% on first $179,500 ($89,750 mfs) and 28% in excess of that.
Social Security is limited to:
$113,700
Medicare is taxed at a higher rate beginning where?
0.9% higher at $200,000 (125,000 mfs, 250,000 mfj).
What’s different about self-employed regarding SS and Medicare?
Multiplies income from self-employment by 92.35% (he deducts the employer’s portion). Then he multiplies that by 12.4 and 2.9 (+ 3.8 if necessary) to figure out his tax liabilities).
What is the age limit for the child tax credit?
Must be under 17
How do you calculate to Child Tax Credit?
Take the difference between AGI and the Threshold, divide by 1000, round UP to next whole number, multiply by 50, then subtract that from total credit amount before phase-out.
How long is the tax due date extension and what does it apply to?
6-months, but only for the Tax Return. Payments cannot be extended and therefore must be estimated and paid by the original due date.
