More Credits
Which credit never phases out based on income?
Dependent Care Benefits - only phases down, not out
What is the IRA contribution limit for 201
The lower of compensation or 5500. If 50 or older by the end of the year the amount is 6500.
What is depreciation?
A method to recover the cost of an asset over a period of time.
Taxpayers whose only capital gain income is a normal capital gain distribution from mutual funds generally compute their tax using:
The Qualified Dividends and Capital Gain Tax Worksheet
What is a conflict of interest?
A conflict of interest exists if the representation of one client will be directly adverse to another client or if there is a significant risk that the representation of one or more clients will be materially limited by the practitioner’s responsibilities to another client, a former client or a third person.
What is the maximum amount of contributions on which the Saver’s Credit may be based?
2000 per taxpayer. 2000 for each taxpayer that is MFJ.
Why is it important to distinguish between taxpayers who are active participants in an employer-maintained retirement plan and those who are not?
If not an active participant, the IRA contribution is not limited. If an active participant, the IRA contribution may be limited.
What is tangible personal property? Provide examples.
Property with a physical existence. Examples desk, machinery, vehicles, livestock.
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.
What does “pay as you go” mean to taxpayers?
Taxes are paid to the IRS as income is earned.
I put a new roof on my home: what is my energy efficient home improvement credit.
It depends - put probably nothing. Only white (or shade therof) metal roof would count.
Credit expired for roofs only geo-thermal and solar power.
What are the percentage rates for the Saver’s Credit?
10%, 20% or 50% based on the filing status and modified AGI of the taxpayer.
What is intangible personal property? Provide examples.
Personal property with no significant value itself but its value is what it can be exchanged for. Examples stock certificate, insurance, goodwill, money.
How much capital loss can a taxpayer generally deduct per year?
Up to 3000 of long term capital loss can be deducted per year.
What is Failure to File and how much is the penalty?
What is Failure to Pay and how much is the penalty?
When there is a balance due and the taxpayer did not pay on time. The penalty is 5% per month (up to 25%) on the unpaid balance.
When there is a balance due and the taxpayer did not pay on time. The penalty is .5% per month (up to 25%) on the unpaid balance.
What is the maximum amount for the Adoption Credit? What things about it are pretty cool?
$13,810 per eligible child
Non-refundable and can be carried forward 5 years
Special needs (circumstances) adoptions get full credit even if no expenses.
What are the main differences between traditional IRAs and Roth IRAs?
Traditional IRA’s may be deductible under certain situations. Funding stops at age 70.5. Tax Deferred.
Roth IRA’s are never deductible. After tax monies when distributed. Can continue to contribute after age 70.5 if you have compensation.
It is important to complete the depreciation accurately, correctly and consistently from year to year. I used a free online software last year and it didn't calculate it for me. What do I need to do now? What additional forms may I need to file?
3115 may be needed - try to find depreciation schedules from prior years to continue with same figures as originally used.
What is interest income and how is interest income reported to the taxpayer?
What is dividend income, and how is it reported to the taxpayer?
Be specific
Interest income is income paid for the use of money. It is paid on 1099
Dividend income is income paid to shareholders of corporations. It is paid on 1099DIV.
What is the due date for filing 1040X?
3 years from the due date of the return or 2 years the tax was paid, whichever is later.
What is QBI?
The QBID is a below-the-line deduction.
QBI must come from a flow-through entity. This includes business income from a sole proprietorship (reported on Schedule C of Form 1040), a partnership (reported on Form 1065), or an S Corporation (reported on Form 1120S)and possibly Schedule E rental income if qualified.
Available of up to 20% of qualified business income.
What does it mean if box 7 of my 1099R is code F?
Charitable gift annuity
When do you use each of the following conventions?
Half year
Mid month
Mid quarter
Half Year – for depreciable personal type assets generally placed in service during the year.
Mid-Month – for depreciable real estate – both nonresidential and residential rental
Mid-Quarter – for depreciable personal type assets if the taxpayer has bought more than 40% of the assets in the last quarter of the year.
I did not receive any 1099 forms but I do have my last bank statement of the year from my Credit Union.
It states I have $100 in dividends. Do I have to report and if so where and how do I report this income?
Yes - Schedule B - it is considered interest.
Credit unions pay their interest in the form of dividends because each account holder is a "member / owner" of the credit union.
What is a Tax Professional’s responsibility upon finding out that a taxpayer has not complied with one or more tax laws?
The Tax Professional must advise the taxpayer of the noncompliance and the consequences of not correcting the situation. The taxpayer will make the decision to make the correction.