Deck 7 Flashcards Preview

Regulation > Deck 7 > Flashcards

Flashcards in Deck 7 Deck (19):
1

Compensation includes:

salary, wages, commission, bonuses, and alimony

2

Roth IRA

No tax impact now or later; contribution limits are combined with all other types of IRA's

3

Nondeductible IRA

Final option, fall back when not eligible for 1) deductible IRA and 2) Roth IRA; no tax adjustment

4

Coverdell Education IRA

No tax adjustment; nondeductible contribution; max contribution per beneficiary is $2,000 annually

5

The adjustment for education loan interest is limited to:

$2,500

6

Keogh plans

For a self-employed taxpayer subject to the self-employment tax; maximum deductible amount is limited to the lesser of: 53,000 or 25% net earnings

7

Calculation for max allowable deduction for a Keogh plan =

gross self-employment income x 20%

8

Itemized deductions may not be reduced below _____ of the amount allowed before the phase-out

80%

9

4 items not reduced by the itemized deduction phase out:

GIMC (gambling losses, investment interest expense, medical expense, casualty and theft

10

Schedule A

Personal expenses

11

Schedule E

Rental expenses

12

Deductible medical expenses formula =

qualified medical expenses - insurance reimbursement - 10% AGI

13

State, Local, and foreign taxes that can be taken as itemized deductions

1) real estate taxes, 2) income taxes, 3) personal property taxes, 4) sales tax

14

Nondeductible taxes

FIB (federal, inheritance, and business tax)

15

Types of interest expense:

HIPPE (Home, investment, personal, prepaid, education); personal interest is not deductible, education is an adjustment, not itemized deduction

16

Refundable credits include:

Child tax credit, earned income credit, withholding taxes, portions of the Hope Scholarship credit, and excess Social Security taxes paid (child and dependent care credit is nonrefundable)

17

Tax credits reduce:

Personal tax liability

18

Personal tax credits

May reduce personal tax liability to zero, but no refund

19

Refundable credits

Subtracted from income tax liability, can create refund