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43 Cards in this Set
- Front
- Back
Explain the Lifetime Learning Credit
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20% of first $10K of tuition. 2013 phaseout MFJ=$107K-$127K; S=$53K-63K. Cannot be taken with American Opportunity Credit (hope). Credit is for both degree and nondegree.
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How does the child tax and child care credit work?
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Expenses capped at $3K for one child and max of $6K. Has sliding scale credit %: 35% if AGI <$15K; 20% if AGI > $43K. Has phase out. Child must be less than 13
CHILD TAX=$1K for each child. Credit is reduced by $50 for each $1K above threshold Threshold same as for child care credit For child tax credit Child must be dependent and <17 years old. Expense cannot exceed earned inome |
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Give some examples of other tax credits
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Adoption=$12,970/child. Can't adopt spouse' child or surrogate costs
Foreign taxes--can be credit or deduction |
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What is a nonrefudable tax credit
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Tax liability can be reduced to zero. they do not create a refund Should be taken out before the payments.
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What DOESN'T the American Opportunity Tax Credit cover
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room and board. The credit is 100% first $2000 and 25% of next $2K. Max is $2.5K. cannot be used with life time learning credit for same individual. covers first four years of college. u do dope no opportunity
Phaseouts |
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What is the lifetime learning credit
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available for tuition and fees for college or professional degree programs. May caim 20% of expenses up to $10K Max $2K. Student must be enrolled at least half time unless taken to acquire or improve job skills. Not available for MFS. No double dip with Sec 529 Phaseouts
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Can a tp claim the AOTC credit or the Lifetime Learning Credit and also exclude from gross income amounts distributed from a Coverdell ESA on behalf of the same student
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Yes, if ESA distribution is not used for the same educcational expenses for which a credit is claimed.
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What is a tax recovery
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return of money--refund, reimbursements, rebates of deductions
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What is the lower base amount for calculating taxability of SS
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S, HOH, QW, MFS=$25 MFJ=$32, MFS=0. Taxable portion is between 50% and 85%
A tp reports SS benefits on line 20 a and taxable amount on 20b MAXIMUM Taxable =85% |
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When is a scholarship excluded from income
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tp is a degree candidate, schlorship does not exceed qualified expenses, it is not designated for other purposes such as room and board, it does not represent a payment
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Is an appointment to us military academy a scholarship or fellowship
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No
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How are distributions from a sec 529 plan treated
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They are reported on 1099. The part of the distribution representing amount paid or contributed is not included in come The beneficiary also does not include any earnings distributed if the total distrubition is less than or equal to a students qualified education expenses
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What are qualified education expenses
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tuition, fees, books, computer equip and software and room and board
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What are typical types of other income that is included on line 21
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cancellation of debt gambling winnings, hobby income, certain court awards, prizes, jury duty pay
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What is a nonrecourse debt
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a loan secured by collateral but which the borrower does not have liability for the loan. Many mortgages are nonrecouse
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When is cancelled debt not taxable
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When tp is insolvent, bankruptcy, certain student loans, qualified farm business, home mortgage
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What is HAMP Home Affordable Modification Program
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Helps financial distressed ho lower monthly mortgage payents. If ho continues to make payments for 3 years, mortgage can be reduced by a predetermined amount and the loan holder is reimbursed. Borrower may exclude the discharge of debt if
the mortgage loan is QPRI and the modification was made before 1/1/2014 OR The discharge of debt occurs when the tp was insolvent |
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If the canceled debt would have been a deductible expense, should it be recognized as income
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No for cash basis tp
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When should a W2G be issued
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for gambling winnings $600 or more, $1.2K bingo or slot, $1.5 kino, any amounts subject to federal w/h
Gambling losses reported on sch a not subject to 2% floor |
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Are court awards for compensation for lost wages taxable
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yes. But compensatory damages are not.
Damage for emotional distress are taxable as ordinary income--however medical care related to emotional distress is not taxable. |
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Are prizes and awards taxable
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Usually---but EE awards for safety, service or achievement are not unless they exceed specified liits
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What other types of income may be put on line 21
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strike benefits, jury duty pay, executor fees, taxable distributions from qualified education plans, gifts received by a sales party host.
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How do you determine if insolvency will affect the taxability of canceled debt
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If the amount of insolvency immediate prior to debt cancellation exceeds the amount of debt discharged, the debt cancellation is not taxable.
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What is QPRI (qualified principal residence indebtedness) and what is the maximum amount
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QPRI cannot be more than the cost of the home plus improvements The maximum amount that can be treated as QPRI is $@ million MFJ and $1 million otherwise. If only part of the loan is QPRI, the exclusion of loan cancellation is limited to the QPRI
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What are some peculiarities regarding alimony
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If they are received after spouse dies, they will automatically be considered child support. If alimony includes property and the property is jointly owned, only 1/2 would be included in alimony
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What are the two refundable tax credits
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EIC and Additional child credit
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What are the test for child care credit
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qualifying person earned income(both spouses must work); work related expense; joint return (must file MFJ); provider identification test
cannot include caretakers under 19 or dependents who are caretakers |
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What is the child tax credit
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tp with income below threshold may claim a child tax credit for each child under 17. The credit is nonrefundable up to $1K per child.
Thresholds=MFJ $110K, S=$75K, MFS=$55K The credit is phased out by $50 for each $1000 of MAGI above thresholds |
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What is the additional child tax credit
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The additional child tax credit is available for tp who do not qualify for the full amount of the nonrefundable child tax credit. TP must be able to claim child tax credit--even if tp cannot take full amount(tax is less than credit) The additional child tax credit is refundable up to $1K for each child
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What is the adoption credit
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$12,970 adption expenses per child. Exp does not included surrogate illegal or spouses child. Expnses
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Which form is used for the American opportunity credit and lifetime earning credit
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Form 8863. Expenses do not inlude room and board medical, insurance, transportation, living expenses
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What is the American Opportunity Credit
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PER STUDENT Max $2.5K or 100% of first $2000 and 25% of next $2000 for first four years of education--no drugs, full workload and degree requirement. Phases out $160-$180 MFJ, and $80-90K S
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What is the lifetime learning credit
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20% of tuition max $2K--no workload requirement, n0 degree, unlimited number of years
Phase out S=$53-63, MFJ=$107-127K |
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What is the EIC
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Mus have SS number; earned income, investment incomemust not exceed $3.3K, citizen and not a depenent. Earned income does not include alimony, pensions, unemployment, inmate wages, workfare payments, SS benefits
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What are the age limitations for EIC for a tp without a qualifying child
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Must be 25 or older,live in us,no foreign income
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What are the EIC income limits
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$46,227 3 kids
$43038 2 kids $37,870 1 kid $14,340 no kids If not done correctly--banned for two years If done fraudulently banned for 10 years |
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What is the retirement savings contributions credit
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$1K for S and $2K for MFJ cor contributions to IRA. Amount of credit is contribution x credit rate based on AGI status
Lowest credit is 10% and highest is 50% |
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Who is eligible for the retirement savings credit
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18 not a full time student or dependent, agi must not exceed $59K MFJ, $29/5=s. $44,250 hoh
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For what will a tp receive residential energy credits
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solar energy systems, fuel cells, small wind energy systems, gothermal heat pumps. Credit i 30%
For nonbusiness energy property credit the Credit can be 10% of cost The total amount is $500 for all tax years after 2006 |
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What other energy credits are available
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plug in electric vehicles at 10% and alternative fuel vehicle property at 30%
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What is the adoption credit for a special needs child
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the max even if expenses were less than max
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Are fees and deposits paid to a daycare agency included in qualifying child care expenses
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Yes
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If a student goes into 5th year for a 4 year degree program can the AOC credit be claimed
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no
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