REG 2 - Adjustments Flashcards
Are contributions made to a Roth IRA deductible as an adjustment? How are accumulated earnings and distributions taxed?
- No tax “adjustment”
- Earnings accumulate tax-free
- Withdrawal of principle is nontaxable
- Withdrawal of earnings is nontaxable
- Maximum contribution is $5,500
What are the contribution limits of Roth IRA?
Contribution limits COMBINED with all other types of IRA are:
Single: $5,500
Married Filing Joint: $11,000
Are there phase-out limits to Roth IRA contributions?
Roth IRA contributions are subject to phase-out income limits.
How do rollovers from regular deductible IRA to Roth IRA get taxed?
Any previously deducted amounts that were used as adjustments are included in income.
There is NO penalty.
How are accumulated earnings and distributions taxed on nondeductible IRA?
- No tax “adjustment”
- Earnings accumulate tax-free
- Withdrawal of principle is nontaxable
- Withdrawal of earnings is taxable
- Maximum contribution is $5,500
Are there phase-out limits to nondeductible IRA?
There are no phase-out limits.
Nondeductible IRAs are used as a last resort.
Are contributions made to a coverdell education savings account deductible as an adjustment? How are accumulated earnings and distributions taxed?
- No tax “adjustment”
- Earnings accumulate tax-free
- Withdrawal of principle is nontaxable
- Withdrawal of earnings is nontaxable
- Maximum contribution is $2,000
What are the contribution requirements of coverdell education savings account?
- $2,000 annually per beneficiary can be contributed
- Beneficiary must be under the age of 18
What are the requirements for coverdell education savings account distributions to be nontaxable?
Withdrawals are nontaxable if they are:
1) Qualified education expenses
2) Any amounts remaining must be distributed when beneficiary reaches 30 years
If beneficiary reaches 30 years they can be rolled over to another family member
Are there phase-out limits to coverdell education savings account?
The phase out limits are:
Single: $95,000 - 110,000
Married: $190,000 - 220,000
What is the maximum student loan interest allowed to be claimed as an adjustment?
$2,500
Can dependents claim student loan interest as an adjustment?
Dependents cannot claim adjustment
Are there phase-out limits to student loan interest adjustment?
Student loan interest is phased out:
Single: $65,000 - $80,000
Married: $135,000 - $165,000
What is the maximum deduction for tuition and fees adjustment?
$4,000
What are the restrictions of not being eligible to claim the tuition and fees adjustment?
A taxpayer is not eligible to claim the deduction if the expenses were applied to either:
1) The American opportunity credit/and or lifetime learning credit
2) Nontaxable education savings account distributions
