IRS focus questions

Publicly traded partnerships

PTP sales, dispositions, losses

Form I-551

Permanent Resident Card known as green card.

Form 2848

Power of Attorney and Declaration of Representative

alimony received

Before 2019 is taxable and deductible.

what are the (4) popular Retirement plans?

Business retirement plans - SIMPLE PLAN - 401K - SEP - IRA

Child tax credit and credit for other dependents

CTC = 2,000 per child nonrefunable ACTC = 1,500 per child refundable AGI phaseout = 200,000 or 400,000 MFJ

Capital gains and losses

Can net long term w long term and short term w. short term. mark-to-market - FMV - often stock values fluctuate. virtual currency - reported on form 8949 of schedule D Issue to borrower - if lending money in connection with your business

Nonbusiness casualty and theft losses

Can only deduct casualty losses from FEMA disaster

Loans from qualified plans

Can take loan from qualified retirement plans like 401(a) - loan retirement ira, 403(a) & 403(b) - loan on annuity retirement account

Form 8812

Child tax credit & ACTC 2,000 per child ACTC - 1,500 per additional child + refundable. Phaseout - 200,000 or 400,000 (MFJ) must be under 17 - must have earned income - other depdendent credit

-Constructive dividends

Constructive dividends are bad when c-corp gets audited and expenses are reclassified as dividends & taxes included.

how are church employees like clergy and ministers taxes?

Need to pay SE tax Housing allowances - subject to SE tax Extra income from weddings, baptism, funerals reported on schedule C - do not have social security or Medicare taxes withheld

Non-business bad debts where do you report and what is the level of value to apply?

Needs to be totally worthless nonbusiness bad debt - report on 8949

form 8606

Nondeductible IRAs

form 8606

Nondeductible contribution - Contributing to IRA above threshold of 6,000 not deductible and must be tracked.

what is the FMV if you barter on services?

Usually FMV of cash + property received unless the services are agreed upon before hand. Safer to take FMV

is Stock dividends & Stock distributions taxable?

Usually not taxable Only taxable when stock is sold Ex. stock split Effect the basis of stock = $ price/ per share Not overall basis of $ invested (principal)

Like-kind exchange what is the sections and form to file?

under section 1031 need to file form 8824

Character of transaction

use of capital gain rates versus ordinary income rates

earned compensation requirements.

wages, salaries, bonuses, commissions, tips, and net earnings from self-employment. It can also include long-term disability, union strike benefits, and, in some cases, payments from certain deferred retirement compensation arrangement

Dividends & other distributions from mutual funds corporations is called what ? What is schedule B income limit ? And what is the tax rate for qualified dividends?

Portfolio / investmenet income Dividend income above 1,500 need to reported on schedule B Qualified Dividend - taxed at preferential rate of maximum 20% Ordinary dividend - taxed at TP tax rate High income earners taxed NIIT

Prohibited transactions and tax consequences

Prohibted for disqaulified person to take distributions from IRA is a 15% tax penalty

Form 3520,

Report transactions with foreign trust, informational return NOT a income tax return - a seperate tax filing seperate from individuals return - If TP receives gift from estate then need to firm a gift receipt. Not taxable to the person inheriting it. * If donated to Charity nontaxable

where are Distributions from qualified and non-qualified plans reported?

Reported on 1099-R traditional ira - pre-tax - can rollover into another ira if done within a certain amount of time. - If directly donated to charity then never taxed roth ira - after tax Nonqualified distributions - offered to high income earners from employer to make catch up contributions

how are the different residency status taxed.

Resident aliens - pay tax on worldwide income unless foreign income exclusion applies. NR alien status - pays tax on only US income. ITIN - for TP without SSN

-Taxability of Social Security and Railroad Retirement benefits

SSA-1099 Not taxable unless TP has other income during year Taxablility threshold MFJ = 32,000 Single/HOH = 25,000 MFS = disqualified Taxable portion of Social Security income never more than 85% and in most cases less the 50% ½ of SSA + total pension > 32,000 - then no tax

other itemized deductions are subject to a floor until 2025. How much is it?

Subject to a 2% AGI floor until 2025

Additional Medicare tax rate? What is the threshold for MFJ, MFS, or Single?

Subject to medicare tax and additional medicare tax on earned income above threshold 0.9% tax withheld Threshold MFJ - 250,000 MFS - 125,000 Single HOH, QSS - 200,000

1099-C when is cancellation of debt not taxable ? (2) What is a nonrecourse loan? What is a recourse loan? What is insolvency ? What is form 982? What is Mortgage forgiveness debt relief act Limit? How is canceled student loans treated? What is QPRI?

Tax treatment of cancellation of debt - foreclosures - insolvency Cancelled debt - Lenders loss on recourse loan is a taxable gain to the TP nonrecourse loan - mortgage where bank can get back property * default on nonrecourse loan is Insolvency - TP is insolvent if debts are more then FMV of total assets prior to the discharge of the debt. * recourse debt is not taxable - Discharge of Indebtedness - form 982 Primary residence forclousure - Mortgage forgiveness debt relief act Limit 750,000 (MFJ) 375,000 all other status QPRI = Qualified principal residence indebtedness Cancellation of Student Loans - nontaxable until 2025 under american rescue plan act

taxable income (4) and non-taxable income (1)

Taxable income 1. wages 2. salaries 3. other SE earnings * SE income * Hobby income on schedule C 4. Additional Income - on schedule 1 ex. gambling, jury duty, prizes and awards. Municipal Interest Income - non-taxable

what are Declared dividends?

Mutual fund or REIT dividends declared but not paid out yet.

Potential penalties

failure to file, underreporting, substantially incomplete, statute of limitations, reduction of tax attributes

when is an alternate valuation date advisable? whar form do you file ? what is the timing options for alternate valuation date?

for large estates form 706 adjust the value of asset's FMV 6 months from when inherited

FBAR & 8938 filing requirement

form 114 FBAR - Aggregate value of financial accounts exceeds $10,000 at any time during the calendar year. Form 8938 -file with IRS - Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.

how form do ministers file to become exempt from SE tax

form 4029 sometimes also need to take a vow to poverty.

what form reports the estate tax ? What form reports the income on estates and what is the filing threshold?

form 706 - estate tax return form 1041 - income generated by estate in excess of $600.00 taxed on transfer of taxable estate. First calc the gross estate = value of all property and cash less debt. taxable threshold - 12,060,000

Annual gift exclusion

gift annual exlcusion is 16,000 in 2022

Estate planning

gift versus inheritance, trusts, family partnerships, charitable giving, long-term care, life insurance

what is the difference between Gross estate and taxable estate? What is a unified credit?

gross estate is all property and cash taxable estate is gross estate less debt - unified credit reduces estate tax & gift tax

when can you exclude a Property sales? Where is it reported? Where is the sale of a business reported?

homes - Section 121 Exclusion of personal home sale. Exclude Up to 250,000 - 500,000 (MFJ) * 1099-S - report on 8949 stock, antiques & collectibles - form 8949 businesses - Form 8594 includes valuation of goodwill

is the income earned before death and received after death taxed to the TP or estate?

is taxed to the TP estate.

Advantages and disadvantages of MFJ/MFS/HOH filing statuses in various scenarios.

joint and several liability

Estimated tax and penalty avoidance

mid-year estimated tax planning

1031 like kind exchanges that are nontaxable

need to be exactly the same if trading to not be taxable

Underpayment penalties and interest

need to pay estimated taxes on time if owed more then 1,000 in taxes due IRS calculate penalty on: - amount of underpayment - period when underpayment due and underpaid - interest rate for underpayments that IRS publish quarterly

Do Dependent needs to report their income if their family is receiving health care from the market place?

no if they are below the filing threshold

income filing requirement for tips

$20

where is FBAR reported and who to file too? what is Form 8938 ? what is Form 8865? what is Form 5471 ? what is Form 3520? and when is it due ?

- FBAR form 114 - with Fin CEN due 04/15 - Form 8938, Statement of Specified Foreign Financial Assets - 5471 - Information Return of U.S. Persons With Respect To Certain Foreign Corporations - 8865 - Return of U.S. Persons With Respect to Certain Foreign Partnerships - 3520 - due 03/15 - Foreign Trusts and Receipt of Certain Foreign Gifts Filing and reporting requirements and due dates

Nonrefundable credit (8)

- Foreign tax credit - Adoption credit - American opportunity tax credit (AOTC has refundable component) - Lifetime learning credit - savers credit - The credit for other dependents - Child and dependent care credit - Child tax credit (CTC) - CTC also has a refundable portion

what form is used for Education credits? What are they called (2)? How is MFS limited? - how is AOC and LTL credit calculated?

- Form 8863 - American opportunity credit and lifetime learning credit - MFS cant claim these credits Qualified expenses - books - tuition - equiptment AOC - 2,500 per student * 40% refundable AOC math = 100% of first $2,000 in qualified exp & 25% of next 2,000 spent - only for undergraduate & at least part time - No felony LTL credit - 2,000 per student math 20% on 10,000

-Unified credit

- estate tax is reduced by Unified credit - gift tax and estate tax reduced by uniefied credit

Refundable credits (5)

1. Additional Child Tax Credit (ACTC) - related to CTC 2. Earned income tax credit (EITC) 3. Premium Tax credit (related to affordable care act) 4. American opportunity tax credit (partially refundable) 5. Credit for excess social security & RRTA Tax withheld

Common credits (5)

1. education - credit for qualified education expenses 2. foreign tax - credit for foreign tax paid in excess of $300 3. child and dependent care - dependent care credit 4. credit for other dependents - ACTC 5. child tax credit - CTC

student loan deduction

2,500 per Tax return same for MFS and indivduals

what form is Innocent spouse reported on? Is innocent spouse usually approved? What must you prove if filing?

8857 form usually rejected or end up in tax court have to prove you had no clue of spouses mis-doings better to file MFS

which trust does not need to file annual return ?

A revocable living trust.correct

what Interest expense is deductible?

Deductible interest - Mortgage interest expense - Late fees on mortgage loans - Points on mortgage loan - Investment interest expense

Distinctions between FBAR and Form 8938 requirements

FBAR (form 114) - filed with FinCEN Financial Crimes Enforcement Network - Aggregate value of financial accounts exceeds $10,000 at any time during the calendar year. Form 8938 -file with IRS - Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.

Form 2555

Foreign Earned Income Exclusion foreign Housing deduction

what are Estate filing requirements and due dates? when is gift tax return due?

Form 1041 - income tax produced by domestic decedent's estate, trust, or bankruptcy estate Form 706 - estate tax on estates more then 12,920,000 estate tax return due no later than nine months from the decedent's date of death - 25% penalty or 1,000 dollars whichever less gift tax due - 04/15

Filing requirements (e.g., Form 709)

Gift tax Form 709 - from living person donor is responsible for paying gift tax need to file if gifting more then 16,000

how long can you amend a filing a claim for refund?

IRS only pays amended return refunds for 3 years

ITIN

Individual Taxpayer Identification Number: Issued to taxpayers who are ineligible to get social security numbers. (usually foreign person)

Green card test

Lawful permanent resident of the U.S. at any time during the year.

Is Life insurance taxable? is IRAs, and retirement plans taxable? what about roth IRA?

Life insurance - not taxable IRAs - taxed when distributed and dedicted from income retirement plans - roth taxed when contributed and never taxed when distributed

form 2120

Multiple Support Declaration

Form 8332

Release of Claim for Child Exemption by Custodial Parent

Non Dividend distributions

Return on capital invested - not uncommon Reduces the basis of stock on the company

IRC sec 121 exclusions

Sale of a personal residence

salt deductions on schedule A are limited to what dollar amount ?

Salt deduction limited to 10,000 dollars of state and local property tax paid

how do you get in trouble for Penalty of perjury? And what is the consequence?

Signing for a fraudulent tax return fines and imprisonment for up to five years

What is the income limit for Social Security withholding? what form do you need to file for Excess Social Security withholding? When might this happen?

Social security has a cap at 147,000 form 843 common if TP has 2 employers and has high income at both jobs

FEMA Disaster area

Taxpayer needs to contact IRS to request relief if tax preparer in a FEMA zone losses all your info & write FEMA number on tax return

custodial parent

the parent with whom the child LIVES with most often

Adjustments, deductions, and credits for tax planning

timing of income and expenses

Tax Home

The general area of a taxpayer's main place of business or employment.

wha type of entity is A irrevocable living trust? who files an A irrevocable living trust?

a disregarded entity a living grantor

Child dependent care credit ( daycare credit)

a tax credit that offsets your taxes in a direct dollar-for-dollar manner for child and dependent care expenses 20 - 35% of expenses

Retirement planning

annuities, IRAs, employer plans, early retirement rules, required minimum distribution, beneficiary ownership, charitable distributions from an IRA

when are 1041 due

due 4 months and on the 15th day after TP dies

how much is the Adoption credits for? How long can your carry forward eligable expenses Limitations on foreign adoptions compared to domestic adoptions ? What is the special rule for adopting a special needs TP.

nonrefundable credit for up to 14,890 per child for qualified adoption expenses and can carryforward expenses for 5 years - MFS cant claim this credit - Foreign adoption - cant use credit until adoption finalized. - Domestic adoptions - can use credit even if adoption not finalized. - If special needs - can take entire 14,890 credit even if did not use all expenses. Does not qualify for foriegn adoptions * Special needs - issued by state and can be having emotional issues for diffcult placement.

where is early withdrawal penalty deductible ?

on 1040

where are mutual fund distributions reported

on 8949 and flows to schedule D

what happens to Jointly Held Property when spouse dies?

passes to surviving spouse

Marital deduction and other marital issues

portability election to surviving spouse

Gift-splitting

spouse can sign consent to MFJ and increase gift tax threshold to 16,000 * 2 = 32,000

Reporting obligations for individuals

1099-contractors * If paying more the 600$ Need to send a 1099-NEC Individual contractor - EE cannot tell independent contractor how it will be done If TP believes they should have been a W-2 file form SS-8 1099-MISC Payments made to medical providers/suppliers of 600$ or more in trade or business are reported on MISC , bartering - FMV of service or property received. If agreed on price of service before exchange then agreed price can be used as income. cash

what happened when asset inherited ?

Basis of inherited property = FMV of asset on date of decedent's death. - called step up basis - always sold at long term gain unless loss - losses do not get inherited - inherited roth ira are still tax free - tax paid on transfer of property but income tax on gift

what form is injured spouse? what filing status must you have?

Form 8379, Injured spouse allocation - for spouse who believe they are entitiled to a portion of the refund - Must file MFJ

-Retirement contribution limits and deductibility

* Traditional 401k contributions * $6,000 contribution limit per TP * $7,000 contribution limit per TP age 50< * $12,000 contribution limit per MFJ (beneficial status here) * Can contribute only earned income

Child and dependent care credit

- 3,000 for one dependent and 6,000 for 2 + - Credit is max 20% - 35% of qualified expenses

World-wide income and exclusion + limits

- Form 2555 - Cannot claim ACTC (only CTC) - foreign earned income exclusion only applies to earned income (not investment income) - 112,000 exclusion per spouse or MFS * need to be living and working oversees - MFJ = need 2 form 2555 - Must meet 2 test 1. Bona Fide residence test - resident of foreign area 2.Physical presence test - need to be aboard for 330 full days of 12 months Form 2350 - for US citizens who want extension until deb 15th to apply for physical presence test. Foreign housing exclusions Form 1116 - foreign taxes paid credit * NR aliens not eligible for FEIE Foreign tax credit test (4 test) - tax must be imposed on TP - tax legal - tax paid - tax is income tax (not sales or excise) Form 1116 - MFJ ($600) or MFS ($300) to file form 1116

Passive Income and Losses

- Income (losses) generated from any type of rental activity or any trade or business in which the taxpayer does not materially participate. - Can net losses agains gains. - Co-ownership isnt automatically treated as partnership - QJV - MFJ couple can split expenses and have 2 seperate schedule C

Filing status

- MFJ - Single - HOH - MFS - QSS

what is the Earned income tax credit and the requirements? Is EITC refundable or nonrefundable? What is the penalty for a mistake or fraud claiming EITC?

- Must have earned income - SSN, less then 10,300 investment income, not dependent, US residence, - (4) due diligence requirements for preparers related to the EITC - Refundable credits - Fraud on EITC - negligible for 10year - Mistake on EITC - 2 year cant claim

Foreign tax credit

- Nonrefundable credit - form 1116 - must be more then 300(MFS) or 600(MFJ) to file form 1116

what form is the Alternative minimum tax reported on ? What form do you use for a AMT credit for prior year? What is this tax system called?

- Parallel tax system - Form 6251 - AMT individuals - Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts - this is what you use to claim a credit in PY

what is Form 5471? Where does it flow to in tax return? What type of income does it commonly include?

- disclose if TP has any foreign accounts - Schedule B Part III - Usually used for interest and dividends

Why use PY tax return (4)

- loss carryovers - YOY comparisons - estimates - asset basis / PY depreciation

Self-Employed Health Insurance

- self-employed health insurance deduction - adjustment to income if you have net income

Form 8938

-Foreign account and asset reporting filed with the IRS

"Kiddie" tax

-Minor children's unearned income not earned income - More then 2,300 in investment income - usually at 10% TR - Can file child tax return or include in parents TR - kiddie tax on form 8814 - May be subject to NIIT if over 200,000 - Must be 18 or under & a dependent

exclusions to income

1. foreign earned income exclusion 2. traditional IRA contributions 3. HSA 4. SE health insurance, 1/2 SE tax 5. alimony paid (if divorce before 2019) 7. scholarships - funds paid to tuition/school 8. Difficulty of care payments - to care for disabled TP in your home and pay called Qualified waiver payments 9. Section 121 exclusion - sale of personal residence 10. Form 982 - excludes canceled debt from income - moving expenses ARE TAXABLE as income under TCJA * Accountable plan - Reimbursement for expenses is excluded from income * Non-accountable plans - reimbursement for expenses is included in income - 50% of SE tax is deductible on Schedule SE - SE health insurance deductible on schedule 1

Penalties and exceptions on premature distributions from qualified retirement plans and IRAs

10% early withdrawal penalty

Itemized deductions for Form 1040-NR

1040-NR can deduct - SALT - Gifts to U.S. Charities - Casualty and Theft from FEMA disaster area

what does 1099-A tell you?

1099-A,= Acquisition or Abandonment of Secured Property Only for business property and real estate Recieved a property as security for the debt that has been abandoned or sold. * recognizes gain or loss once you receive property back. * lender must file these * sometimes just informational and security sale covers forclosure debt. 1099-C is for personal property debt cancelation.

what is reported on 1099 MISC? what is reported on 1099 NEC? what is reported on 1099 K reporting? what to do if TP see irregularities and needs corrections?

1099-MISC - Oil and gas royalties very popular & Payments made to medical providers/suppliers of 600$ 1099 NEC - If paying more the 600$ Need to send a 1099-NEC - Rent, non-employee compensation or royalties 1099-K - reporting of third party network transactions from credit and debit card on paypal, Stripe, square of $600.00 or more. Contact the issuer for irrgularities.

where are Foreign pensions & retirement income reported ?

Form 8938 - foreign accounts SE retirement plan - 1. SIMPLE - SE retirement plan with > 100 EE 2. SE - SE retirement place with no or few employee's

Filing requirements due dates Form 4868

April 15th standard deduction 13,850 w-2 income $600 - SE income In 2022 due date was 18th for Emancipation Day Form 4868 Extensions - oct 15th

Health savings accounts contribution limit? HSA excess contributation excise tax? where is HSA reported?

HSA Contribution maximum * Self $3,650 family $7,300 - TP over 55 can contribute an extra 1,000 - Paired with high deductible health plan (HDHP) - pre-tax dollars - 6% penalty excise tax on extra amount over HSA contribution limit - Form 8889

Net investment income tax rate ? what are the threshold for MFJ, single, or MFS? What are the limitations for NR? where is this tax calculated?

3.8% imposed on investment income on higher income tax payers Thresholds MFJ or QSS = 250,000 MFS = 125,000 Single/HOH =200,000 - not valid for NR - Form 8960

Charitable contributions

60% AGI limit - applies to cash contributions only 50% AGI limit - applies to most noncash contributions 30% AGI limit - donating property that would have resulted in a long term capital gain is sold. 20% limit - gifts to private nonoperating foundations and other non-public charities Cash donation less then 250$ - TP must keep written records of bank statements Cash donation more then 250$ - must get acknowledgment from non-profit

-Constructive receipt of income

A client receives income as soon as it is made available to his or her use without restriction. Used in cash accounting. Income is credited when it is made available without restriction and may not be postponed in order to avoid taxation. Income items constructively received in a given year must be recorded in that year, even though their actual receipt may occur the following year.

Basis of Assets

Basis = cost or FMV wehen received Depreciation is recorded, however work of art & land are not depreciated

Excess contributions and tax treatment (

Excess contribution subject to a 6% excise tax. contribution limit to 6,000 or 7,000 if over 50

Form 1116

Foreign Tax Credit

where are Installment sales reported ? What are the speacial rules for related party transactions?

Form 6252 = installment agreement related parties - If related party buyer resells in less then 2 years then seller must report total gain in CY regardless is instrallment payments paid or not. original cost - basis - sale price = gross income gross income / sale price = GP % date of acquisition - possible recalculations recharacterization

what are the (2) popular education planning accounts? what are the (2) education credits for qualified expenses? Are nonresident aliens allowed to take education credits?

IRC section 529 plans Coverdell Education Saving Account (ESA) NR not eligable for education credits - lifetime learning - AOC

Household employees is called what tax? How much does the employee need to earn before FICA needs to be withheld? Where is an household employee reported? Does the household need an EIN like a business?

Nanny tax - Generally if pay more than 2,400 then ER must withhold EE and ER Social security and medicare - Schedule H, - Household needs EIN

what is reported on Form 8606

Nondeductible IRAs

Other credits refundable(5) and non-refundable (8)

Nonrefundable credit 1. Foreign tax credit 2. Adoption credit 3. American opportunity tax credit (AOTC has refundable component) 4. Lifetime learning credit 5. Retirement saving contribution credit or the savers credit 6. The credit for other dependents 7. Child and dependent care credit 8. Child tax credit (CTC) - CTC also has a refundable portion Refundable credits 1. Additional Child Tax Credit (ACTC) - related to CTC 2. Earned income tax credit (EITC) 3. Premium Tax credit (related to affordable care act) 4. American opportunity tax credit (partially refundable) 5. Credit for excess social security & RRTA Tax withheld - health coverage tax credit (for older people expired 2021) - energy credits - 30% of qualified expenses up to 3,200 Retirement savings contribution credit - Saver's Credit

how are members in active combat taxed?

Not taxable Unreimbursed expenses from military are what is deductible Files form 3903 to deduct unreimbursed expenses from move

when is a traditional ira taxed ?

Not taxed until distributed. Can contribute and lower AGI Grows tax free

Inherited retirement accounts

Now need to be fully withdrawal in 10 years if not then excise tax. * if minor do not need to start distributions until 18 Grandfather IRA before 2019 could chose lump sum or stretch IRA & stretch it out

Itemized deductions and QBI

QBI can be taken whether the TP itemizes or takes the standard deduction

qualification for dependency

Qualifying person for HOH - Must be related by blood, adoption, or marriage. Foster child does qualify if legally placed in home by federal agency - dependent parent * paying more then 50% of living expenses - lived with TP >50% of year - Dependent either qualifying child or qualifying relative. Test for dependency (3) 1. Dependent taxpayer test - no one elses dependent 2. Joint Return test - not married (w. exception) 3. citizen ship of residency test (citizen of U.S. or Mexico, unless being adopted.) Qualifying child (5) test 1. Relationship test - blood or legal child 2. Age test - under 19 (not 19) or full time student under 24 3. Residency Test - live with TP >6 months 4. Support Test - support over >50% of care 5. Tiebreaker test - goes to parent with higher AGI if stayed with parent same time during year. (if can agree does not apply) Qualifying Relatives (4) 1. Gross income test - Parent dependent must have less then 4,400 in gross income (including interest & rental) 2. Support test - provide more then 50% of support *welfare payments do not apply 3. Household/Relationship test - *If not related to TP, need to be living with TP for 365 days *If related to TP, need to be living with TP for 6 months 4.Relationships after death or divorce *Mother in law always related to TP if they continue to care for them.

rental income

Real Property - real estate * Passive income on schedule E - does not pay SE tax * Business like motel on schedule C - providing daily cleaning services or breakfast - Professional real estate dealers/ full-time * C-corps rental income taxed at corp rate * Passive losses limited to income and can be carried forward to reduce passive income Personal Property - anything other than a building Form 8582 Special 25,000 loss allowance - to deduct losses against W2 income. * MAGI phaseout 100,000 - 150,000 Minimal rental use rule - Rent days less than 15 days do not need to report on TR Active Participation - must be an active participate to take 25,000 allowance. - Must own at least 10% and make management decisions - If TP lives in separate state need to prove active participation Material Participation - Higher standards Personal property rentals - reported on schedule C Income earned by developer is reported on schedule C Co-ownership - if you pay entire bill you are entitled to reimbursement from other owners of property Nonrecourse loan = not liable for loan and no basis in rental property except extra dollars paid to get rental property ready.

Adjustment to income

Reduce taxable income and reduce taxable amount owed - impact if receiving the premium tax credit & APTC - above the line adjustments - Schedule 1 * educator expenses * Army reserve can deduct expenses on 2106 * Health Savings Accounts = Form 8889 * Moving Expenses for Armed Force * Self-Employment Tax Deductions - computed on sch SE * Penalty for Early Withdrawal * Alimony Paid * Student Loan Interest Deduction * ther Adjustments to Income * misc ex. archer MSA accounts etc

where is Pass-through income reported? What is QBI

Schedule K-1 - income based on capital basis qualified business income - income or gain from domestic trade or business activity, including rental activities

what is the Qualified Business Income (QBI) deduction? Does it reduce SE tax? What are the income limitations?

Section 199A - 20% of QBI is deductiable by individual - Does not reduce SE tax and does not matter if your itemize or take standard deduction Income Limitation pre-QBI deduction taxable income has thresholds MFJ (340,000- 440,100) Others status (170,000 - 220,050)

Investor versus trader and what election does trader need to file?

Securities dealer = trader = needs elections 475 * gains and losses reported on schedule C * Losses not limited to gain * Sales treated as sale of inventory Investor = casual investor - does not need to pay SE tax

itemized deductions vs standard deduction

Standard Deduction - Single or MFS - 12,950 - HOH - 19,400 - MFJ - 25,900 - Dependent - 1,150 Additional $1,750 for > 65 or blind

tax recovery for first time homebuyer credit

first time homebuyer credit repayment - qualifying home purchase made between April 9, 2008, and December 31, 2008 - must repay the credit over 15 years - 1/15 of credit repaid over 15 years * credit = 7,500 and needs to be repaid over 15 years

Required minimum distributions

only applies to IRA (not roth) -age 72 - (if you turn 73 after 12/31 then roth can be passed down to beneficiary & stay untaxed.

distributions differences from traditional IRA & Roth IRA

Traditional IRA - Not taxed until distributed. Can contribute and lower AGI Grows tax free ROTH IRA - never get to deducted but then it grows tax free and when you pull it out is tax free

what form do you file if you were treated as an independent contractor but believe you were an employee and want Uncollected Social Security and Medicare tax taken out?

Use Form 8919 to figure and report your share of the uncollected social security and Medicare taxes due on your compensation if you were an employee but were treated as an independent contractor by your employer. use form ss-8 to be treated as a w-2 employee

Gambling income and allowable deductions

W-2G Can deduct losses on schedule A & limited to winnings - need documentation

Personal info needed (3)

biographical info - State issued photo ID, DOB & current mailing address - marital status & dependent - SSN/ITIN/ATIN

Previous IRS correspondence with taxpayer

can search IRS notice number on IRS website or call the number if you believe its suspicious You have a balance due. You are due a larger or smaller refund. We have a question about your tax return. We need to verify your identity. We need additional information. We changed your return. We need to notify you of delays in processing your return.

Items that will affect future/past returns

carryovers, net operating loss, Schedule D, Form 8801, negative QBI carryover

Marriage and divorce what is a common law marriage?

divorce settlement common-law: Allow you to file MFJ or MFS even without a marriage liscense Also entitle spouse to ½ of community income - Community property states still need a marriage liscense alimony

Flow-through entities (5)

passthoughs include 1. sole proprietors 2. estates 3. LLC 4. trust 5. s-corp shareholders Passthrough entities are allowed to deduct Section 199A Section 199A - 20% of QBI - does not reduce SE tax

what is the ACA premium tax credit? what is the credit that helps fund the ACA?

premium tax credit - refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Marketplace Net investment income tax funds the affordable care act

Medical, dental, vision, long-term care expenses

qualified expenses more than 7.5% of your AGI deductible on schedule A

where are State/local income tax refund and other tax recoveries reported?

reported on 1099-G

where are Royalties and related expenses reported?

reported on 1099-NEC

Personal property rental

reported on schedule C

Basis of stock after stock splits and/or stock dividends

research, schedules, brokerage re cords

Other income what is not the non-taxable portiong of scholarships? How is barter income valued? What tax does hobby income pay? Alimony? combat pay? taxable recoveries ? NOL is reported where? and what is the limits?

scholarships - Amount paid for room and board is taxable barter income 1. if agree'd on service price before hand can accept property at service price. 2. FMV of property received. 3. FMV + Fee paid to recieve as adjusted basis hobby income - No SE tax on hobby income alimony - if divorce before 2019 non-taxable combat pay unearned income - rental or portfolio income taxable recoveries - refundable credit TP took in PY - State tax refund is the most common type of recovery - 1099-G should be sent by the end of january NOL - capital losses deductible on 8949 schedule D and 3,000 per year. illegal income

self-employment tax

self-employment tax = 50% of FICA tax employer usally pays - can deduct on schedule SE - Self-employed SEP (self employee pension) - cannot be offered employer sponsered healthcare from any spouse to qualify for deduction. Social Security - 6.2% for the employer 6.2% for employee Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total

Various taxes deductibility

state and local, personal property, real estate

Different stock markets

stock option - the right to buy a specific number of shares of company stock at a pre-set price commodity - commonly oil, minerals, wheat etc. ISO (Incentive stock options) - equity compensation that allows you to buy company shares for a specific exercise price ( must buy options to be a shareholder) ESPP (employee stock purchase plan) - participating employees can purchase company stock directly, at a discounted price

Other adjustments to income student loan interest deduction limit - alimony deduction limit moving expenses deduction limit for active miltary? what is the form used ? write in adjsutment?

student loan interest - 2,500 per tax return alimony - divorce before 2019 moving expenses for active military- alll deductible and form 3903 write-in adjustments - ex. medicare waiver paymetns