Dependent Detectives
A qualifying child must meet this five-part test to be claimed as a dependent.
What are the relationship, age, residency, support, and joint return tests?
An employee receives free use of a company vehicle for personal errands. This is an example of this type of compensation.
What is a fringe benefit?
A taxpayer's holding period for property generally begins on this date.
What is the day after the property is acquired?
Money received from a life insurance policy because of the insured's death is generally excluded from this.
What is gross income?
Adjustments to income are deducted to arrive at this important figure on a tax return.
What is Adjusted Gross Income (AGI)?
A taxpayer receives a birthday gift of $20,000 from their grandmother. This person is generally responsible for any gift tax that may apply.
Who is the donor (grandmother)?
A child who is permanently and totally disabled can qualify as a qualifying child regardless of this requirement.
What is the age limit?
A taxpayer receives stock instead of cash as payment for services. The value of the stock is generally measured using this.
What is the fair market value of the stock on the date received?
If a taxpayer receives property as a gift, the holding period for determining gain generally includes this person's holding period.
Whose is the donor's holding period?
Qualified scholarships are generally tax-free when used for this type of expense.
What are qualified education expenses (such as tuition and required fees)?
Eligible educators may claim an above-the-line deduction for unreimbursed classroom expenses using this adjustment
What is the educator expense deduction?
A taxpayer receives free landscaping services in exchange for preparing the landscaper's tax return. The value of the landscaping is generally this.
What is taxable barter income?
A qualifying relative does not have to meet this test that applies to qualifying children.
What is the age test?
A taxpayer receives an unexpected cancellation of a $10,000 credit card debt. Unless an exception applies, the IRS generally treats this as this type of income.
What is cancellation of debt (COD) income?
A taxpayer sells an investment for a gain after owning it for exactly one year. The gain is taxed as this type of capital gain.
What is a short-term capital gain?
Interest earned on these bonds is generally excluded from federal income tax.
What are state and local government (municipal) bonds?
Contributions to this type of retirement account may be deductible as an adjustment to income if eligibility requirements are met.
What is a traditional IRA?
A taxpayer wins a new car on a game show. Even though they didn't receive cash, the value of the car is generally this.
What is taxable income at its fair market value?
A taxpayer generally cannot claim a married dependent who files a joint return unless the joint return is filed only to claim this.
What is a refund of withheld taxes or estimated tax payments?
This accounting method requires taxpayers to report income in the year it is actually or constructively received.
What is the cash method of accounting?
A taxpayer sells stock for a $6,000 capital loss and has no capital gains for the year. This amount is carried forward to future tax years after deducting the maximum allowable loss this year.
What is $3,000?
This type of employer-provided benefit is generally excluded from an employee's income when provided under a qualified plan.
What is health insurance coverage?
Self-employed taxpayers may deduct premiums paid for this type of coverage as an adjustment to income, subject to certain limitations.
What is health insurance?
A taxpayer receives municipal bond interest and Social Security benefits. The municipal bond interest is not federally taxable, but it is included when calculating this.
What is provisional income for determining the taxable portion of Social Security benefits?
Foster children may qualify as qualifying children if they are placed with the taxpayer by this type of agency or court.
What is an authorized placement agency or a court?
A taxpayer performs services in exchange for another person's services instead of receiving cash. This type of transaction generally creates taxable income.
What is a barter transaction?
The difference between the amount realized and the adjusted basis determines this.
What is the gain or loss on the sale of property?
Property received as a gift is generally excluded from the recipient's gross income because of this reason.
What is it was received out of detached and disinterested generosity (a gift)?
A taxpayer contributes to a Health Savings Account (HSA). If eligible, these contributions are generally treated this way on the federal tax return
What is an adjustment to income (an above-the-line deduction)?
A taxpayer's father lives in a nursing home all year. The taxpayer pays more than half of the father's support, and the father otherwise qualifies as a dependent. The father never lives with the taxpayer. The taxpayer may still qualify for this filing status.
What is Head of Household?