Questions and Answers
Below the line deductions include?
Standard deduction
Eligible educators can deduct up to _______ of qualified expenses paid during the tax year.
$250
Which of the following is an ineligible medical expense for HSA, Archer MSA, and MA MSA?
The net capital gain is taxed at _______ if the married filing jointly taxpayer income is less than $80,800.
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To claim a child as a dependent, they must meet the qualifying child test or ________________.
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Ordinary dividends are taxed at the same rate as __________ income tax rate.
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Distributions from HSA, Archer MSA, or MA MSA are non-taxable when _________________________________________.
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Which residency status is used when an individual is neither a U.S. citizen nor a resident alien for tax purposes?
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_____________ and ____________ are what taxpayers must know to calculate their tax amount.
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For mortgages entered into after December 15, 2017, the amount of interest the taxpayer can deduct is no more than ______________ of the debt used to buy, build, or substantially improve their principal home and a second home.
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__________ reduce the amount of tax due.
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Which form is for beneficiaries who get income from trusts and estates?
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___________________ consists of both earned and unearned income that is used to calculate the tax. It is generally less than adjusted gross income due to the deductions.
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To satisfy the Substantial Presence Test, how many minimum days (in the current year) must you be physically present in the United States?
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Complete the equation.___________ = Selling Price - Purchase Price.
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_________________ helps sole proprietorships calculate the profit or loss from a business while also providing the IRS with your total business income and deductions.
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What type of deduction is a HSA contribution?
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As it applies to compensation income, the general rule for sourcing wages and personal services income is controlled by ________________________________.
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Which is considered non-taxable income?
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______________ is used to offset income and payroll taxes for low-income workers and to provide an incentive to work.
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Which is a non-deductible business expense?
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What amount of upper cap is applicable on business gifts?
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If yearly dividend amounts exceed __________, a Schedule B must be completed and attached to Form 1040.
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There are _________ filing statuses.
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Study Notes
Tax Deductions and Credits
- Below the line deductions include the standard deduction.
- Eligible educators may deduct up to $250 for qualified expenses incurred during the tax year.
- Tax credits directly reduce the total tax liability.
Health Savings Accounts (HSA) and Medical Expenses
- Ineligible medical expenses for HSA, Archer MSA, and MA MSA include breast enhancement.
- Distributions from HSA and similar accounts are non-taxable when spent on qualified medical expenses for dependents.
Income Tax and Capital Gains
- The net capital gain is taxed at 0% if income is less than $80,800 for married couples filing jointly.
- Ordinary dividends are taxed at the same rate as ordinary income.
- Taxable income is defined as earned and unearned income after deductions.
Child Dependents and Tax Filing
- To claim a child as a dependent, they must meet either the qualifying child test or the qualifying relative test.
- Taxpayers need to know their taxable income and filing status to calculate their taxes.
- There are five filing statuses available: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er).
Mortgage Interest and Business Deductions
- For mortgages taken after December 15, 2017, the interest deduction is capped at $750,000 for primary and secondary homes.
- Expenses for personal vacations, like family trips, are non-deductible as they are considered personal in nature.
Forms and Income Sources
- Form 1041 is for beneficiaries receiving income from trusts and estates.
- Schedule C is used by sole proprietorships to report profits or losses and provide income and deduction details to the IRS.
Presence and Residency for Tax Purposes
- A minimum of 31 days of physical presence in the U.S. is required to meet the Substantial Presence Test.
- Non-resident aliens do not qualify as U.S. citizens or resident aliens for tax purposes.
Business Gifts and Dividends
- The upper cap for business gifts is limited to $25 per recipient.
- If yearly dividend amounts exceed $1,500, a Schedule B must be attached to Form 1040 for detail.
Income Credits
- The Earned Income Tax Credit helps low-income workers by offsetting income and payroll taxes, serving as an incentive to work.
- Military personnel allowances are generally considered non-taxable unless pertaining to retirement pay.
Studying That Suits You
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Description
Test your knowledge of tax-related terms and principles with these flashcards from Intuit Academy's Tax Level 1 course. Each card focuses on key deductions, eligibility, and regulations that are important for tax preparation. Perfect for students and individuals looking to improve their understanding of taxation.
