FR4

Question 1

What is the order when calculating taxable income to a for payments of a divorced spouse? ex. total payment of 45000

Answer 1

total payment = 45000

1. 45000 - lump sum property settlement = x
2. x - child support = y
3. y - alimony = taxable amount

Question 2

What counts as taxable compensation for a college student?

Answer 2

Scholarships not used to pay for qualified expenditures (tuition, fees, books) are taxable to the recipient

Question 3

What type of interest is nontaxable?

Answer 3

interest from state and local muni bonds are taxa exempt

Question 4

What items are deductible on Schedule C?
COGS
Liability insurance
Wages
Rent
SE tax
office exp
Repairs and main
Travel and meals
Depreciation

Answer 4

COGS - fully deductible
Liability insurance - fully deductible
Wages- Only wages paid to employees
Rent - fully deductible
SE tax - NOT deductible (half is deducted  on 1040)
office exp - fully deductible
Repairs and main exp - fully deductible
Travel and meals - 50% meals deducted
depreciation - fully deducted

Question 5

Are uncollected rents taxable through cash basis?

Answer 5

No. May not deduct uncollected rents or any other bad debt regarding uncollected cash bc not included in income.

Question 6

What taxes are included for itemized deductions?

Answer 6

• include State and local income taxes OR local sales taxes(not both, whichever is greater)
• FIT are NOT deductible
• Real estate are deductible (residence and vaca home)
• property taxes are deductible
• only can total $10k

Question 7

What types of interest is included for itemizes deductions?

Answer 7

1. Home mortgage interest - qualified int for first and second home
   
   • int up to 750k(MFJ)/375k to acquire,build, substantially improve home
2. Investment interest - limited to net taxable investment income (int for tax-free investments is nondeductible)
   * * student loan int are not itemized deduction bc they are adjustment
   * * unsecured auto loan doesn’t count

Question 8

What are the types of Itemized deductions?

Answer 8

• taxes up to 10K
• Casualty losses - excess of 10% AGI
• Medical expenses - excess of 10% AGI
• Interest expense
• charitable contributions
• Misc (gambling, estate tax)

Question 9

What is the requirement/amount for estimated quarterly tax payments?

Answer 9

1. has to be over $1k in tax liability

Payments the lessor of:

1. 90% of CY
2. 100% of PY or 110% of PY if AGi>150k

Question 10

What are the 5 refundable credits?

Answer 10

Child tax credit, EIC, W-2 Withholding taxes, Excess SS paid, AOC(40% refundable)

Question 11

How is the CC deduction calculated?

Answer 11

limited to 10% of taxable income before the DRD and CC deduction. CC Carryovers are include