REG M4 Adjustments

Question 1

What is not included in earned income when calculating IRA contributions limitations

Answer 1

-Interest and dividends
-Annuity income
-Pensions
-Alimony

Question 2

What is the special rule for a taxpayer who has an IRA and participates in an ESRP

Answer 2

When 1 spouse participates in the ESRP but the other does not.

Spouses not participating will have different numbers for the AGI phaseout and range.

Question 3

HSA distribution form

Answer 3

Form 8889

Question 4

What is the maximum deduction for educator expenses

Answer 4

$300

$600 if MFJ and both spouses are qualified educators

Question 5

How is a trad IRA taxed

Answer 5

Contributions = not taxed

Distributions = Fully taxable

Question 6

What is the maximum amount each taxpayer con contributes to an IRA when married

Answer 6

under 50 7,000 each for 2024

over 50 8,000 each for 2024

Question 7

What can drug dealers deduct

Answer 7

Only COGS (Business)

Question 8

Can illegal businesses deduct their operating exps

Answer 8

Yes (Business)

Question 9

List of above the line deductions

Answer 9

-Educator expenses

-Trad IRA contributions

-Student Loan Interest

-HSA contributions

-Moving exp (only armed forces)

-1/2 of SE tax

-Contributions to certain self-employed retirement plan

-Penalty on early withdrawlal of savings

-Alimony paid B4 2019

-Attounry fees in certain discrimantory cases

Question 10

IS self-employed health insurance deductible

Answer 10

The premiums paid are deductible for taxpayer, spouse and dependents

Question 11

2024 Max contributions to an IRA for a single taxpayer

Answer 11

Under 50 lesser of 7,000 or earned income

Over 50 lesser of 8,000 or earned income

Question 12

Where do AGI deductions appear on the tax form

Answer 12

Schedule 1 page 2

Question 13

Is student loan interest deductible

Answer 13

Yes

Question 14

Is a penalty on the early withdrawal of saving tax deductible

Answer 14

Yes

Question 15

What is a High Deductible Health Plan

Answer 15

-Health plan with a minimum deductible, a maximum annual deductible and out-of-pocket limitation exp

Question 16

Rules for deducting alimony

Answer 16

If the alimony agreement is B4 2019, the payee can deduct alimony payments

Question 17

Math to find deductible limitation to an IRA for a taxpayer who also participates in an ESRP

Answer 17

START: taxpayers AGI
LESS: Phaseout threshold

=Excess over phaseout range

DIVIDE: Phaseout Range

= Phaseout %

MULTIPLY BY: Contribution amount

= Amount that CAN’T be deducted

Question 18

Are self-employed retirement plan contributions deductible

Answer 18

yes

Question 19

What is the importance of AGI

Answer 19

Serves as a basis for computing % limitations on certain itemized deductions

Question 20

Math to find the max amount that can be contributed to a Roth IRA (phaseout)

Answer 20

START: taxpayers MAGI
LESS: Phaseout threshold

=Excess over phaseout range

DIVIDE: Phaseout Range

= Phaseout %

MULTIPLY BY: Max allowed contribution

= Amount that CAN’T be contributed to the Roth IRA

Question 21

How much can you deduct of student loan interest in a year?

Answer 21

2,500

Question 22

Items considered a qualified education exp

Answer 22

books, supplies, computers, equipment and other materials used in the class

Question 23

Is political contributions and lobbying deductible

Answer 23

No

Paying money to monitor legislative activity is deductible

Question 24

Is self-employment tax deductible? If so what %?

Answer 24

Yes 50%

Question 25

Who is eligible for an HSA

Answer 25

-Under 65 -Self-employed -employee of an employer who has a High Deductible Health Plan

Question 26

HDHP qualification amounts for single and family plans

Answer 26

Single 1,600 annual deductibles Out of pocket limit 8,050 Family 3,200 annual deductibles* 16,100 out of pocket limit

Question 27

How are the contributions and distributions from an HSA taxed

Answer 27

Personal contributions are deductible Distributions are nontaxable as long as they are used to pay for qualified medical expenses

Question 28

Max contributions to a HSA

Answer 28

Single = 4,150 Family = 8,300 If employer contributes the amount is nondeductible but isn't included in gross income

Question 29

Can illegal payments be deducted (Bribe)

Answer 29

NO

Question 30

2024 Max contributions to an IRA for a married taxpayer

Answer 30

Under 50 lesser of 14,000 or earned income over 50 lesser of 16,000 or earned income

Question 31

2024 deductible limitation and phaseout to an IRA for taxpayers who also participate in an employer-sponsored retirement plan

Answer 31

For AGI Single = 77k-87k Range = 10k MFJ = 123k - 143k Range = 20k MFS = 0-10k Range = 10k

Question 32

Are contributions made to a Roth IRA deductible

Answer 32

NO

Question 33

Who can deduct moving expenses

Answer 33

Only active members of the armed forces under direct orders to move

Question 34

What is the phaseout for student loan interest deduction

Answer 34

Single = 80k-95k MFJ = 160k-195k

Question 35

When are deductions to an IRA limited

Answer 35

When the taxpayer participates in another type of retirement plan Such as an employer-sponsored retirement plan

Question 36

Who is a qualified educator

Answer 36

Teachers, counselors, principals and aides in grades k-12

Question 37

Is reimbursement for company exps under an accountable plan included in employee's gross income

Answer 37

NO

Question 38

Can legal fees be deducted

Answer 38

Yes, but it must be related to the business

Question 39

How are contributions to a deductible traditional IRA deducted

Answer 39

Deducted to get to AGI Allowed for the year you made the contribution any time before April 15th

Question 40

Deductible vs out of pocket limitation

Answer 40

Deductible = Amount you pay B4 your health insurance kicks in Out-of-pocket limitation = Max amount you have to pay in a year B4 insurance will cover ALL of your medical expenses

Question 41

Types of SE retirement plans

Answer 41

SEP IRA SIMPLE IRA

Question 42

SEP IRA maximum contributions

Answer 42

Lesser of... 20% of SE net income reduced by 1/2 SE tax or 69,000 76,500 age 50 or older

Question 43

SIMPLE IRA maximum contributions

Answer 43

Lesser of... 100% SE net income reduced by 1/2 SE tax or 15,500 19,000 age 50 or older