Individual Taxes

1. Accounting Basis

   Annotations:

   • Cash
2. Portfolio Income

   Annotations:

   • Interest & Dividend income
3. Qualifying Child vs. Relative
   1. Child

      Annotations:

      • < age 19, or < age 24 if student. Must be N. America resident
   2. Relative

      Annotations:

      • You must provide > 50% of support. Must live w/ you, unless parent. Must be N. American citizen
4. Petitions After Audits

   Annotations:

   • How long does the taxpayer have to petition for appeal after an audit? = 90 Days
   1. If No Petition...

      Annotations:

      • How long does a taxpayer have to pay tax due after an audit? = 10 days
5. Statute of Limitations for Tax Audit

   Annotations:

   • 3 years 6 years if 25% or more of gross income is omitted Clock starts on the LATER of the due date or the filing date of return
6. File Claim for Tax Refund?

   Annotations:

   • Refund must be claimed within "LATER OF": 3 yrs of return due date OR within 2 years of being paid

Annotations:

• *MSA/HSA contributions *Investment penalties for early withdrawal *Self-employed medical insurance premiums *Self-Employment Tax (approx. 50%) *IRA Contributions *Student loan interest (can't be another taxpayer's dependent) *Moving expenses *Alimony *Attorney fees in discrimination lawsuit *Qualified Tuition & Fees *Teacher Expenses

1. Section 179
   1. $500k deduction w/ dollar-for-dollar reduction after $2M
   2. Excess 179 expense is CF'd to next yr
2. Mortgage Interest
   1. $1M deductible amt
   2. Home Equity
      1. $100k deductible amt
3. Business Gifts
   1. $25 deductible
4. Business Start-Up Costs
   1. Up to $5k deducted, reduced $-for-$ over $50k
      1. Amortized over 180 months
5. Medical Expenses
   1. Amts > 10% of AGI may be deducted
   2. "If paid on behalf of another", deductible when:
      1. 1) N. America citizen 2) Reside w/ you OR parent 3) Provide > 50% support
6. Foreign Taxes
   1. Income & Real Estate taxes ARE deductible
   2. Personal Property taxes NOT deductible
7. Excess Investment Int Exp
   1. Gross inv income - (inv exp > 2% of AGI) = Net Inv Income
8. Mortgage Points
   1. IF prepaid interest on new home purchase
      1. Points are amortized over mortgage life
9. Charitable Contributions of L/T CG (related to charity's function)
   1. Deducted at FMV, up to 30% AGI
   2. Charitable Contributions of L/T CG (NOT related to charity function)
      1. Deduction taken for adj. property basis, up to 50% AGI
10. Casualty Loss
    1. "Lower of X" - Insurance Proceeds Rec'd - $100 - 10% AGI
       1. Decrease in FMV
       2. Basis in Property
11. Miscellaneous Deductions (in Excess of 2% of AGI)
    1. Continuing Education
    2. Business Travel
    3. 50% Meals & Entertainment
    4. Union Dues
    5. Tax Prep. Fees
    6. Legal Fees to Collect Alimony
    7. Appraisal Fees to Value Casualty Loss of Charity
12. NOT Subject to "Phaseout" based on income, etc.
    1. Medical
    2. Casualty
    3. Gambling
    4. Investment Interest Exp
13. Traditional IRA Contributions

Annotations:

• Investment interest expense in excess of investment income Charitable contributions Excess Section 179 Capital losses AMT Paid Passive Activity Losses

1. Passive Activity Loss (PAL)
   1. No Carryback
   2. CF indef.
2. Charitable Contributions
   1. 5 yr CF
3. AMT (Paid)
   1. CF indef.
   2. Applied to future "regular" income tax
4. Capital Losses
   1. $3k max loss per yr,
   2. Loss retains character (ST or LT)
5. Net Oper. Losses (NOL's)
   1. Carried back 2 years
      1. CF'd 20 years

1. Personal Property
   1. Mid-year / Mid-quarter
      1. Mid-quarter when 40% > purchases in Q4
   2. Personal Tangible Property - Farming
      1. MACRS 150 Depr. Table
2. Real Property
   1. Mid-month
3. Leasehold improvements
   1. 15-Yr S/L Depr

1. 1040 - Personal Tax Return
2. Schedules
   1. Schedule B - Interest & Ordinary Dividends
   2. Schedule A - Itemized Deductions
   3. Schedule C - Profit or Loss from Business
   4. Schedule D - Capital Gains & Losses
   5. Schedule E - Supplemental Income & Loss
   6. Schedule G - Capital Gains & Losses
   7. Schedule H - Household Employment Taxes
   8. Schedule I - Alternative Minimum Tax
   9. Schedule K-1 - Partner's Share of Income, Deductions, Credits
   10. Schedule SE - Self Employment Tax
       1. 15.3% tax rate assessed

1. Accident or Disability insurance premiums
2. Investment Int Exp on Tax-Free Securities
3. Roth IRA Contributions

1. Refundable Credits

   Annotations:

   • A tax credit which takes the taxpayer's tax owed on the return below zero. Results in a refund
   1. Earned Income Credit (EIC)
   2. American Opportunity Credit
   3. Add'l Child Tax Credit

1. Scholarships

   Annotations:

   • When they are NOT in return for services rendered AND the money is used "only" for tuition & books
   1. Includable in income

      Annotations:

      • Scholarships for room & board
2. Workman's Comp Ins. Benefits
3. Child Support
4. Divorce Property Settlements

1. State & Municipal Bond Interest
   1. US EE Savings Bond
2. Dividend Income
   1. S-Corporation

1. Unemployment Compensation Taxable
2. Any lawsuit payments for punitive damages
3. Alimony

1. Head of Household

   Annotations:

   • -Must have dependent child-Must provide > 50% of child's support -Must live w/ them > 50% of year
2. Qualifying Widower

   Annotations:

   • -Must have a dependent child -Gets "Married Filing Jointly" status for the year of death + 2 tax years
3. Married Filing Jointly

   Annotations:

   • -Must be married at end of year -If one spouse dies, they must be married at the end of the year