REG - Individual Flashcards
What are the requirements for a qualifying child?
Close relative
Age limit - younger than the taxpayer, & Under 19 (or 24 FT student)
Residency and Filing Requirements - must have the same principal place of abode as the taxpayer for more than 1/2 of yr. ; must be a citizen of North America.
Eliminate the Gross Income Test
Support Test - must not contribute more than 1/2 of own support.
What are the requirements for a qualifying relative?
Support Test - must not contribute more than 1/2 of own support.
Under Gross Income Limitation of gross income less than $4,700 (2023)
Precludes dependent filing a joint return
Only Citizens of North America
Relative
Taxpayer lives with individual if non-relative for whole yr.
Requirements that enable a taxpayer to be classified as a ‘qualifying widow(er)’
- The taxpayer’s spouse died in one of the two previous years and the taxpayer did not remarry in the current tax year;
- The taxpayer has a child who can be claimed as a dependent;
- This child lived in the taxpayer’s home for** all of the current tax year**;
- The taxpayer paid over half the cost of keeping up a home for the child; and
- The taxpayer could have filed a joint return in the year the spouse died.
Who qualifies as Head of Household?
- Unmarried, legally separated, or married and has lived apart from his or her spouse for the last 6 months of the yr as of the close of the taxable yr.
- Not a qualifying widow(er)
- Not a nonresident alien
- Maintains as his or her home a household that, for more than 1/2 of the taxable yr is the principal residence of a qualifying person, including a dependent child, parent or relative.
What is the formula to calculate Individual Income?
Gross Income
less: Above the line Adjustments
= Adjusted GI
Less: Std Deduction
or Itemized Deductions - below the line deduction
= TI before QBI deduction
Less: QBI Deductions
= Taxable Income
What is constructive receipt of income?
Constructive receipt of income occurs when a party obtains income that is not yet physically received but has been credited to the taxpayer’s account and over which they have immediate control. The taxpayer is liable to pay taxes on all income constructively received.
Consideration to arrive at AGI for the recipient of Alimony on or before 12/31/2018 requirement?
Payment must be in cash or cash equivalent.
Payments cannot extend beyond the death of the payee-spouse.
Payments must be legally required pursuant to a written divorce (or separation) agreement.
Payments cannot be made to members of the same household.
Payments must not be designated as anything other than alimony.
The spouses may not file a joint tax return.
Exceptions to the penalty on premature distribution before age 59 1/2 from a traditional IRA?
HIM DEAD
Home buyer (first time) $10,000 max if used toward first home
Insurance (medical)
Medical expenses in excess of the percentage of AGI floor
Disability
Education
Adoption or birth of a child made within one year from the date of birth or adoption ($5,000 maximum exclusion)
Death
How is the amount of social security benefit that is taxed determined?
If the combined income is < the threshold, the amount taxed is the lesser of 1) 50 percent of the benefits; or 2) 50 percent of the excess of the combined income over the threshold.
If the combined income is > the threshold, the amount taxed is the lesser of 1) amount calculated above plus 85 percent of the excess of the combined income over the threshold; or 2) 85 percent of the benefits.
What are the deductions or adjustments for AGI?
Adjustment for AGI - above the line deductions TM- SHEAP
Traditional IRA contribution
Moving expense for members of the US armed forces.
SE tax 50%, Health Insurance, REtirement Plan
HSA
Educator expenses - includes interest on education loan
Alimony - if paid for a divorce or separation agreement executed on or before December 31, 2018.
Attorney fees paid in certain discrimination & whistle blower cases.
Penalty on early withdrawal of savings
What are the itemized deductions from AGI,reported on Schedule A?
Below-the-line deductionsfrom AGI - personal expenses (Cash Basis)
SIM CEM
State, Local & Foreign Taxes (SALT) - limit to $10,000 in aggregate
Interest Expense - Home Mortgage, Investment
Medical Expenses
Charitable contribution
Casualty Losses - the aggregate of the excess losses (over $100) exceeds 10% of AGI.
Eucation Loan Interest - limited to $2,500
Misc. such as gambling losses
What are the limits for charitable contributions?
Cash contribution 60% of AGI.
Ordinary income property (held for less than 1 yr) 50% of AGI
Property 30% of AGI,
Capital gain property 30% of AGI,
What are the types of business used in the calculation for QBI Deduction, Section 199A?
SSTB - Specified Service Trade or Business - involves direct services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, and brokerage. Engineers and Architects are specifically excluded.
QTB - Qualified Trade or Business - Any business other than SSTB
What are the limitations of QBI Deduction?
The basic calculation is 20% of QBI if below taxable income limits
Single and all others - TI $182,100 - $232,100
Married filing jointly - TI $364,200 - $464,200
if QTB is above income limit
use the greater of - Limited to 50% of W2 wages for the business or
25% of W2 wages for the business plus 2.5% of the unadjusted basis immediately after the acquisition (UBIA) of all qualified property. Compare to 20% QBI and choose lesser number.
If SSTB and above income limit - No QBI deduction is allowed.
What are the different categories for the calculation of the QBI Deduction?
Category 1
Category 2
