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Flashcards in REG 6 Deck (23):

Charitable Contributions over the ____ ltd for individuals. Can you carry them forward? For how long?

50% of AGI, carry over for 5 years.

Need to get the other limits down here, there are 50% charities and 30% charities and 30% property and 20% property.


Adoption Expenses - deductibility
child's medical expenses
legal expenses
agency fee

The adoption expenses themselves aren't deductible

The adoption qualifies for the adoption credit

The medical expenses aren't included in this, they are deductible to the extent they are over 10% of AGI on schedule A

Up to 13,190 non-refundable credit


How much is the adoption Credit

$13,190 not refundable


Tip: They try to trick you with deductible expenses if there's a credit.

What's an example

Listing Adoption Expenses


Is a health club membership classified as a medical expense if your doctor recommends it? How about over the counter meds?

Nope and nope.


Now I got a question wrong where they asked "how much may the Walton use as medical expenses in calculating itemized deductions" and I added up everything even though it wasn't over the 10% because that's what you "use" and I thought they were asking about what qualified. Both answers were there the 0 and the 1,410 total. I guess "in calculating itemized deductions" means the amount of itemized deductions.

Question sucks.


Are the taxes you pay to register your car deductible on Schedule A?

Yes IT'S an ad valorem tax on the value of personal property.


If you sell the house and they don't prorate the property taxes can you deduct them?

No you only get to deduct for the period you held the property.


There's a difference between investment interest and deductible investment interest expense what is it?

The investment expenses are netted out against the investment income (which is dividends and interest and capital gains), what's left you can net against investment nterest


Employee receives an expense allowance included in gross income.

When the expenses aren't accounted for to the employer. Then the employee deducts them as an employee business expense on schedule A.


Are management fees on an IRA tax deductible?

Only if you pay them with non-IRA funds and then they are a misc. itemized deduction that has to exceed the 2% floor.


Hobby income - where reported
Hobby expenses - where reported

Income - list on Line 21 of 1040 "Other INcome"
Expenses - List on Schedule A Misc. Itemized deductions if over 2% and combined with everything else


Is Alimony an above the line or below the line deduction in arrive at AGI

It's above the line.


Are capital losses above the line in arriving at AGI

Yes, capital losses are above the line, a deduction for AGI.


Trade or business expenses an above the line deduction when arriving at AGI

Yes, above the line in arriving at AGI


Trick: When they say "above the line deduction" (at least in this question) they were really talking about expenses that appear on other schedules that end up in the income section on the 1040. Again they suck, because saying trade or business expenses is an "above the line" deduction is bullshit, it's a deduction on the schedule C, which flows through to the 1040. Same with Schedule D cap losses.

In short, the stuff that's on schedule A is below the line as it's deducted from AGI.


Is the earned income credit a refundable credit? Do you need wages withheld to get it.

Yes it's refundable.
No you just don't need to make under the threshold.


American opportunity credit - how much

100% of first $2,000
25% of second $2,000
Phaseout begins at 160,000 for joint ends at $180,000


Lifetime Learning Credit
How much and limitation

20% of tuition paid and $2,000
Phaseout starts at $110,000 and ends at $130,000


Child Care Credit
this thing has a lot of phase-out stuff and I refuse to learn it

35% up to $15,000 in earned income


Credit for the Disabled - How much

There's a lot of limitations for this if your under 65 and there's a lot of calculations if your over far as if it's over $5,000.

Basically if you're over 65 it's 15% doesn't say for what, says applies "when they retire" and the initial amount is $5,000, then your supposed to reudce it by SSI and 50% of your AGI over $7,500.


Earned Income - Is unemployment earned income for the purposes of the EIC

No - but combat pay, meals and lodging provided by employer for the convenience of the employer and self employment income are.


What's the maximum child care credit?

Child must be your dependent and your paying them to be gainfully employed.
$3,000 is the max for one person, $6,000 for two
You have to subtract out the value of employer provided child care