Individual Taxation Flashcards
(113 cards)
1
Q
Where are payroll taxes deductible?
A
Schedule C
2
Q
Are estimated FEDERAL income taxes paid a deduction or a credit?
A
Credit
3
Q
Are estimated STATE income taxes paid a deduction or a credit?
A
Itemized deduction (Schedule A - SALT)
4
Q
How much in real estate losses can offset earned income with active participation?
A
$25,000
5
Q
What AGI’s eliminate and phase out real estate offset for earned income?
A
$150,000 eliminates and $100,000 phases out at 50 cents on the dollar
6
Q
What sources of interest income are not taxable?
A
State, local, and territorial bond interest
7
Q
How much in real estate loss carries forward against earned income?
A
$4,000
8
Q
Are cash and/or stock dividends taxable?
A
Cash dividends are taxable but stock dividends are not (they lower basis)
9
Q
Are unemployment income and/or worker’s comp taxable?
A
Unemployment income is taxable but worker’s comp is not taxable
10
Q
Are charitable contributions a personal deduction or business deduction
A
Personal itemized deduction (Schedule A)
11
Q
Is owner’s salary deducitble?
A
No, it is a draw/distribution. Reduces capital but not deductible
12
Q
What amount of Series EE bond interest is not taxable?
A
Amount of principal and interest used for education expenses is not taxable.
13
Q
Are dividends from a life insurance policy taxable?
A
No
14
Q
What is on Schedule A?
A
Itemized Deducitons
15
Q
What is on Schedule B?
A
Interest and Ordinary Dividends (All portfolio income)
16
Q
What is on Schedule C?
A
Business expenses
17
Q
What is on Schedule D?
A
Capital gains and losses
18
Q
What is on Schedule E?
A
Rental and passive income
19
Q
How much interest can a taxpayer deduct?
A
Amount incurred in the current year
20
Q
Is forgiven debt taxable?
A
Yes
21
Q
What are the five most common non-taxable items?
A
Welfare, child support, life insurance proceeds, worker’s comp, damages
22
Q
What rates are dividends and interest taxed at?
A
Dividends are taxed at capital gains rates, interest is taxed at normal rates
23
Q
What are the dollar amount and time horizon that trigger the FinCEN form 114 - FBAR?
A
$10,000 at any point during the year
24
Q
What are the four most commonly mistaken items that are not taxable on deductible on Schedule C?
A
Estimated taxes (tax credit - personal not business expense), Owner’s salary, Owner’s health insurance (sch. 1), Charitable contributions (sch. 1)
25
How much is the capital loss deduction limitation and how far can it be carried forward?
$3,000 and can be carried forward indefinitely
26
Personal assets and investments (not business assets) are called...
Capital assets
27
What is the MFS capital loss limitation?
$1,500
28
How long do business assets have to be held to be 1231 assets?
Over a year
29
What type of asset are inventions and patents to the creator?
Ordinary income asset
30
What type of asset is inventory?
Ordinary income asset
31
What percent capital gains does the lowest tax bracket pay and what is the income cutoff for that bracket?
0% and around $40,000
32
Is land a capital asset or 1231 asset?
Depends on the use
33
What is the income cutoff for the 15% short-term capital gains cutoff?
About $450,000
34
What happens to negative QBI deductions.
Carry forward
35
QBI is the lower of what?
20% of taxable income or the total of all QBI deductions
36
What is the one business type that cannot use the QBI?
C-Corporations
37
What year was the alimony deduction disallowed?
2019
38
Are gambling winnings netted against gambling losses?
No, the winnings are added to income and the losses are itemized.
39
What are the taxation levels of SSI?
$25k/$32k is 50%, $34k/$44k is 85%
40
What is the maximum K-12 Education deduction?
$300
41
What is the maximum Student Loan deduciton?
$2,500
42
What are the deduction and taxation on Roth and Education IRA's
$0
43
How much can be contributed to a SEP IRA?
20% of Schedule C profit
44
How much below earned income can be contributed to IRA?
$0
45
At what income limit does the spousal IRA begin to phase out?
Around $220k
46
What is the income cap on IRA deductions if covered by employer retirement plan (double dipping)?
Around $120k MFJ
47
What is the only penalty deductible in the entire tax code?
Early withdraw of non-retirement savings (CD's) because you are taxed for full interest that you didn't receive
48
Where does the student loan deduction begin to phase out?
Around $70k/$140k
49
How do self-employed people pay into social security?
Self-employment tax
50
What are the three forms used (in order) to calculate the Self-employment tax?
Schedule C net profit to Schedule SE. Then a deduction for half on Schedule 1.
51
At what age can you utilize the catch-up IRA and how much is the difference?
Age fifty for $1,000
52
What is the maximum age to contribute or withdraw from an IRA?
There is none
53
What are the approximate Roth IRA phase out amounts?
$138k/$218k
54
For Roth IRA are earnings and distributions excluded from tax?
Yes
55
What is the IRA contribution cut-off date?
April 15th
56
What is the Coverdell education IRA maximum child age and maximum contribution?
18 maximum age and $2,000
57
What is the 529 plan education IRA maximum child age and maximum contribution?
No age limitation and up to the gift tax limitation. (Much more flexible than Coverdell)
58
Where is Self-employed health insurance a deducted?
Depends on Schedule C profit - If no profit then it is itemized
59
Who can be covered under self-employed health insurance?
Self, spouse, and children under 27
60
How much are the HSA limitations for high-deductible plans?
Around $3,600/$7,200
61
Are HSA's deductible and/or taxed?
They are deductible and not taxed at distribution
62
What are the SEP Keough plan limitations?
25% of Schedule C net profit limited to around $58k
63
Name two strange deductions.
Jury duty pay given to employer and legal fees to sue sexual harassment cases
64
How much self employment tax is deductible?
One-half
65
Can passive losses from other than real estate offset earned income?
No.
66
How much is the Credit for the Elderly or Disabled, is it refundable, and what is the minimum age?
15% of eligible income (subject to AGI limits), non-refundable, and age 65
67
How much can an employer take for the Paid Sick and Family Leave Credit?
12.5% for half wages paid, 25% for full wages paid (not salary)
68
What is the time period you can take the credit for the American Opportunity Credit?
All of this year and three months of next year
69
What are the academic parameters for the student for the parents to take the American Opportunity Credit?
At least half time and a candidate for a degree
70
How much of the American Opportunity credit is refundable and under what situation is it refundable?
If the AOC takes taxable income to $0 then it is 40% refundable up to $1,000.
71
How is the American Opportunity Credit tiered for college spending and what is the minimum amount that can be spent to get the full credit?
100% of the first $2,000 and then 25% of the next $2,000. $4,000 is the minimum you can spend to get the credit. $2,500 total for credit
72
What are the phaseouts for the American Opportunity Credit and the Lifetime Learning Credit?
Phase-out around $80k/$160k. Gone at $90k/$180k.
73
What is the maximum of the Foreign Tax Credit?
It cannot exceed the percentage of income earned outside of the U.S.
74
How much is the Lifetime Learning Credit, how many can a household get, and is it refundable?
20% of tuition up to $2,000. One per household per year and it is not refundable.
75
How is the Retirement Savings Contribution Savers Credit calculated and what is the maximum amount of the credit?
50% of IRA contributions for a maximum of $1,000. In addition to IRA credit.
76
What are the AGI maximums for the Retirement Savings Contribution Savers Credit and can full-time students or dependents claim it?
Around $37k/$74k and they cannot claim it.
77
How much is the Family Tax Credit and is it refundable?
$500 and non-refundable
78
How much is the Small Employer Health Insurance Credit?
Companies can claim 50% of contributions to health insurance for employees
79
How long must a child live in the house to claim them for Earned Income Credit?
More than half the year
80
How much is the Child Tax Credit, what is the age limit, and how much is refundable?
$2,000 for under 17 with $1,600 refundable
81
At approximately what income level do Family Tax Credit and Child Tax Credit phase out?
Around $400k
82
What percentage of daycare costs is the Dependent Care Credit and is it refundable?
20% and non-refundable
83
What are the maximum amounts for the Dependent Care Credit and what is the maximum age of the child to qualify?
$3,000 for one child and $6,000 total. (Meaning the credit is usually $600 or $1,200 because it is 20%). Maximum age is 12 (under 13)
84
Can full time adult students take the Dependent Care Credit? What income is the credit based off of.
Yes. It is based off of the earned income of the lowest earning spouse.
85
What is the AGI cap for the Dependent Care Credit and what is the credit amount for the lowest earners (under $15,000)?
No AGI cap and 35% for the lowest earners.
86
Do private elementary schools qualify the taxpayer for the Dependent Care Credit? Can the child care be in-home? Can it be a parent or sibling watching the child? What about a grandparent?
No. Yes it can be in-home. No. Yes a grandparent will qualify the taxpayer.
87
Is the Earned Income Credit refundable? How much earned income must you have to qualify? Can passive and portfolio income put the taxpayer over the limit to qualify?
Yes. Must have some earned income. Yes, other types of income can put the taxpayer over the limit.
88
What form must tax preparers fill out for refundable credits and Head of Household status?
Form 8867
89
What percentage of eligible income is used to calculate the Credit for the Elderly or Disabled?
15%
90
How much is the Residential Energy Credit, is it refundable, and does it carry over?
30% of the cost of the project, non-refundable but does carry over. State rebates reduce the cost of the credit.
91
What costs does the Adoption Credit cover and what is the amount of the credit? Is it refundable and does it carry over?
All costs and around $16,000. Not refundable but does carry over
92
What is the income phase-out amount for the Adoption Credit and when is it taken?
Phase-out around $240k and usually taken in the year the adoption is finalized but can be carried over to the next year.
93
How much is the Clean Vehicle Credit for new and used cars. Is it refundable?
$7,500 for new cars, $4,000 for used cars. Non-refundable
94
What are the price limits for new cars and vans and used cars for the Clean Vehicle Credit?
New cars $55k, New vans $85k, Used cars $25k
95
Which common business tax credit is not part of the General Business Tax Credit?
Foreign Tax Credit
96
How far is the General Business Tax Credit carried back and forward?
Back one year and forward 20 years.
97
What is the formula for the Business Tax Credit limitation?
Subtract $25k from tax liability. Multiply by 25%. Then subtract that from original total tax liability. That gives you then limitation. Then subtract the limitation from sum of all tax credits. That is your credit that you can carry back one year and forward twenty.
98
How much is the maximum Work Opportunity Credit and how is it calculated?
$2,400. 40% of first $6,000 qualified wages to employees in their first year ONLY.
99
How much is the maximum Empowerment Zone Employment Credit and how is it calculated?
$3,000. 20% of first $15,000 qualified wages to employees in their first year ONLY.
100
How is the Small Employer Health Insurance Credit calculated and what is the max number of employees?
50% of health insurance costs for employees if you provide 50% or more of their health insurance costs for businesses with under 10 employees.
101
How do you calculate the Foreign Tax Credit limitation?
(Foreign income/Total income) * US tax on worldwide income
102
What percentage is the Incremental Research Credit, when and where must it be done, and what does NOT apply?
20%. Must be done in US before commercial production begins. No credit for market research, social science research, and routine data collection
103
What percentage is the Rehabilitation Credit and how is it taken?
20%, one-fifth (4%) every year for five years. Must use straight-line depreciation
104
SALT uses the greater of what two taxes?
State income tax and sales tax
105
What can you do in lieu of a deduction for Foreign Property taxes?
If it's a foreign rental you can put it on Schedule E.
106
How many homes is mortgage interest deductible on?
Two
107
How do you calculate the itemized deduction on mortgage interest for homes above $750k?
750,000/Principal balance * mortgage interest paid in current year. No carry forward
108
What do you have to do to take home equity loan interest as an itemized deduction?
Fix up the home
109
When do points on a new mortgage become an itemized deduction?
Immediately
110
How are points on a refinance handled?
Amortized over the life of the loan
111
Where/when are the only time casualty and theft deductions are taken?
In a presidentially declared disaster area.
112
What are the main 2% AGI items not deductible after TCJA.
Union dues, tax prep fees, safety deposit boxes, unreimbursed job expenses
113
