Individual Taxation Flashcards
(74 cards)
Individual Net Capital Loss
Individuals only
$3k max deduction per year
If more than $3k = no carry back, carry forward forever
Individual Cap. Gain / Loss
Long term = holding period > 1 year
Tax rates:
20% Rich / 15% Average / 0% Poor
Short Term = holding period < 1 year
Tax rates:
ordinary income tax rate
ESO
Non-qualified Options
Taxable when granted if readily ascertainable value
No tax at date of exercise
If no ascertainable value, tax when exercised
ESO - Qualified Options
Incentive Stock Options
Employee Taxation:
- not taxable income as compensation
- capital gain/loss when sold
Employer Taxation:
- no tax deduction
ESO - Qualified Options
ESPP (Employee Stock Purchase Plans)
Employee Taxation:
- not taxable income as compensation
- capital gain/loss when sold
Employer Taxation:
- no tax deduction
ESO - Qualified Options
ESPP (Employee Stock Purchase Plans)
Exception to Cap. Gain / Loss
If FMV < stock on grant date, recognize ordinary income for lesser of:
1 - Diff of FMV when sold and when exercised
2 - Diff of exercise price and FMV on grant date
Adjustments
Educator Expenses
Up to $250 of qualified expense paid
K-12 teacher or aide for >= 900 hours
Qualified expenses:
- prof dev
- common and accepted in field
- helpful and appropriate in field
- necessary in field
Deductible IRA’s
Earnings = tax free
Withdrawals considered taxable income
Not deductible when:
1 - excessive AGI
(single/HoH = $62-72k / MFJ = $99-119k)
2 - active in another plan
(phase out at $186k-$196k if spouse is active in another plan)
Nondeductible Moving Expenses
Meals
Pre-move house hunting
Expense of breaking a lease
Temporary living expenses
Adjustments
Self Employed
- health insurance
- SS / Medicare tax
Self employed health insurance = 100% deductible
Self employed SS/Medicare tax = 50% deductible
Additional Standard Deductions (2)
Blind / Over 65
Qualified:
- 65 or blind = $1,550 single / $1,250 married
- 65 and blind = $3,100 single / $2,500 married
Non-qualified:
- each 65 or blind = $2,500 married
- both 65 and blind = $5,000 married
Itemized Deductions
Taxes (RIPS)
Real estate taxes
Income taxes
Personal property taxes
Sales tax
Non-deductible Taxes
FIB
Federal taxes (including SS)
Inheritance taxes for estates
Business and rental property taxes
Charitable Contributions Limitations
Overall Limit = 50% AGI
Cash = may be all 50% Gen. prop. = lesser of basis or FMV Long-term appreciated prop. = lesser of: 1 - 30% AGI 2 - remaining amount to reach 50% after other contributions
Misc. Itemized Deductions
Not taken as part of allowable adjustment
Combined exceed 2% of AGI
Types of Misc Itemized Deductions
Unreimbursed business expenses Education expenses Uniforms Business Gifts Employment agency fees Expenses of investors Subscriptions to professional journals Tax preparation fee Debit card fees incurred to pay income tax Activities no engaged in for profit (hobbies)
Other Misc Deductions
no 2% AGI test
Gambling losses
Federal state tax paid on income from being the beneficiary of an estate
Refundable Tax Credits… WE ACE
Withholding taxes
Earned income credit
American Opportunity Credit
Child tax credit
Excess social security paid
Child and Dependent Care Credit
Computations
Maximum = 35%
- taxpayer AGI must be > $15k
Phase = 20-35%
- decreases 1% for each $2k of AGI over $15k, but not below 20%
Minimum = 20%
Elderly and/or Permanently Disabled Credit
Available for:
65+ / retired due to permanent disability
Base amounts:
- single = $5k
- MFJ (1 eligible) = $5k
- MFJ (both eligible) = $7.5k
- MFS = $3,750
Lifetime Leaning Credit
20% of qualified expenses up to $10,000
Adoption Credit
$13,570
- per child (including special needs)
Phase Out = $203,540 - $243,540
Foreign Tax Credit Formula
taxable income from all foreign operations
/
taxable income + exemptions
x
US taxEarned Income Credit
Refundable
Eligibility:
- live in US half year +
- meet certain low-income threshold
- not have more than specified amount of disqualified income
- between 25 - 65
- file joint return with certain exceptions
