Retirement
Retirement
Itemized Deductions I
Self-Employment Income
Self-Employment Income
100
What form is used to report the taxpayer’s retirement account distributions?
What is Form 1099-R.
100
Where is income tax withheld from a retirement account or IRA distribution reported on the Form 1040A tax return?
What is It is included on Form 1040A, line 40.
100
How does one determine the taxable income of taxpayers who itemize deductions?
What is Adjusted gross income (AGI) minus total itemized deductions and total exemptions.
100
What income-reporting form could an independent contractor sometimes receive from the person who paid them for their services?
What is Form 1099-MISC.
100
How is cost of goods sold determined?
What is Beginning inventory plus purchases, plus labor, supplies, depreciation, etc. attributable to product manufacture or preparation for sale, minus ending inventory.
200
What pensions are fully taxable?
What is Pensions to which the taxpayer contributed no after-tax money to the cost, or from which they have already recovered their after-tax cost.
200
What is the maximum amount of contributions on which the Saver’s Credit may be based?
What is $2,000 for individuals and up to $4,000 on a joint return.
200
What types of taxes are deductible?
What is State and local income or sales taxes (but not both), real estate taxes, personal property taxes, and foreign income taxes that were paid or withheld during the year.
200
Line F of Schedule C asks for the accounting method used in the business. What is the difference between the cash method and the accrual method of accounting?
What is Under the cash method, only income actually or constructively received or expenses actually paid during the year are included on the return. Under the accrual method, income and expenses are reported in the year earned or incurred, even if received or paid in another year.
200
If the taxpayer has contract labor, what should you remind the taxpayer that they should do?
What is You need to remind the taxpayer that if they paid any individuals over $600, they need to complete Form 1099-MISC for each individual.
300
Under what circumstances would a pension be only partly taxable?
What is When the taxpayer has contributed after-tax money to the cost and has not yet recovered it.
300
What are the rates for the Saver’s Credit?
What is The rates are 10%, 20%, or 50%, depending upon filing status and modified AGI.
300
A taxpayer makes their final 2014 state estimated tax payment on January 15, 2015. Where should they report this item?
What is It is included on their 2015 Schedule A, line 5. This payment also should have been included on the estimated payments line of their 2014 state return.
300
What does it mean if a proprietor “materially participates” in the business?
What is It means the taxpayer is active in running the business in a substantial way on a day-to-day basis.
300
What is the purpose of self-employment tax?
What is To provide social security and medicare coverage to self-employed individuals.
400
What traditional IRA distributions are fully taxable?
What is Those to which the taxpayer made no nondeductible contributions (all contributions were fully deductible).
400
Are early distributions from qualified retirement plans always penalized?
What is No, there are exceptions that apply to many situations depending on the type of retirement account the distribution was made from.
400
Why is it important to distinguish qualified home mortgage interest from personal interest?
What is Qualified home mortgage interest is deductible, but personal interest is not.
400
Why is it important to know whether or not the proprietor materially participates?
What is If the proprietor does not materially participate, any loss from the business is a passive loss and generally may be currently deducted only against passive income.
400
What amounts does a proprietor have “at risk”?
What is Amounts invested in the business plus any business debts for which the proprietor is personally liable.
500
When would a traditional IRA distribution be partly taxable?
What is When the taxpayer has made nondeductible contributions.
500
How does a Tax Professional know if an exception applies?
What is The Tax Professional can determine if an exception applies by using thorough interview questions when discussing the distribution with the taxpayer. The distribution code on the Form 1099-R can also be helpful to the Tax Professional, but may not correctly report an exception that applies.
500
Is the cost of items purchased to benefit a charitable organization deductible? (For example, ballet tickets to raise money for a non- profit hospital.)
What is Only the amount paid in excess of the value of the item received is deductible. For example, a taxpayer donates $100 to a charitable organization and receives two basketball tickets worth $40 apiece; the taxpayer made a $20 charitable contribution.
500
What are returns and allowances?
What is They are amounts included in gross income that were later refunded to customers who returned merchandise for refund or who were given a partial refund for having received damaged merchandise or other similar reasons.
500
What difference does it make if the proprietor is at risk or not?
What is Only amounts at risk may be used to determine the actual loss on Schedule C.
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