Credits
How much is the Other Dependent Credit for a qualifying relative?
Up to $500 per qualifying relative.
Is interest received on U.S. Treasury obligations taxable on state and/or local returns?
No US Treasury interest is not taxed by the state and local governments.
What document will a taxpayer receive from their employer to report their disability pension payments?
1099R
What type of income is generally reported on Schedule C?
Earned income that is a non passive activity
What are two types of passive activities?
1) a trade or business in which the taxpayer does not materially participate or
2) rental activities
What is the difference between nonrefundable and refundable credits?
Nonrefundable credits reduce tax down to zero but not below.
Refundable credits reduce the tax down to zero and can increase the refund.
Is municipal bond interest taxable on a federal return?
No municipal interest is not taxed by the federal government.
Under what circumstance can disability pension qualify as earned income for the EITC?
If the taxpayer has not reached minimum retirement age.
What is business-use property?
Property used in the production of income.
What is active participation?
The taxpayer must own at least 10% and makes management decisions in a significant sense – including approving new tenants, deciding rental terms, arranging for repairs and approving capital expenditures.
What is the premium tax credit?
This is a tax credit which reduces the cost of health insurance purchased through the Marketplace.
Why do qualified dividends and capital gain distributions on Form 1099-DIV receive favorable tax treatment?
Treated as long term capital gains which get favorable tax treatment.
Money going into a retirement fund is called ?
Money coming out of a retirement fund is called ?
Moving monies from one fund to another is called ?
Contribution
Distribution
Rollover
What line are Health insurance premiums paid on behalf of the sole proprietor deducted?
Schedule 1 Line 29
What kind of taxpayer will receive a Schedule K-1?
A partner.
How will the taxpayer’s employer paying $500 of a taxpayer’s $2,000 childcare expenses affect the Child and Dependent Care Credit, and on which form is it reported to the taxpayer?
Eligible expenses must be reduced by the $500. Cannot double dip tax benefits for this money.
This is reported in Box 10 on Form W2.
Which taxpayers will use the Qualified Dividends and Capital Gain Tax Worksheet?
Those taxpayers with Qualified Dividends (box 1b of Form 1099DIV) and normal capital gain distributions (box 2a of 1099DIV) and those with long term capital gains on Schedule D
Who is eligible to establish and fund a traditional IRA? (at least two qualifications)
Have earned income / compensation
Under age 70 1/2
Maximum contribution of 5500/6500 if over age 50
What is the Simplified Method for computing the qualified home office deduction?
$5 per foot up to 300 feet
How is a partnership taxed?
The partnership does not pay tax on its income. Instead the partnership provides information to its partners and they pay tax on their personal tax returns.
I am a deduction available for up to 20% of income associated with business activity.
QBI
What is the difference between a long-term and a short-term asset?
Property held one year or less is short term. Property held more than one year is long term.
Differences between Traditional IRA and Roth IRA; at least 3
Roth: never deductible; not taxable when distributing as after tax monies; can continue to contribute after age 70.5 if you have compensation; no RMD's; income limits for contributions
What business-use expenses can generally be deducted on Form 8829?
Mortgage interest, real estate taxes, home repairs, maintenance, rent, utilites, house insurance, depreciation and other expenses.
What criteria must a real estate professional meet for their activities to be considered non passive income
(both criteria must be met)?
1) More than half the personal services they performed in trades or business during the year were performed in real property trades or businesses in which they materially participated.
2) They performed more than 750 hours of services during the year in real property trades or business in which they materially participated.