Foundations of Tax 2024

Questions and Answers

What is the modified AGI limit above which a Roth IRA contribution is not allowed for a married couple filing jointly?

$138,000

$228,000 (correct)

$153,000

$218,000

At what modified AGI does the AMT exemption begin to phase out for individuals?

$138,000

$218,000

$578,150 (correct)

$153,000

For a single filer, what is the modified AGI limit above which a Roth IRA contribution is prohibited?

$228,000

$218,000

$153,000 (correct)

$138,000

If your modified AGI is $138,000, what is the status of your ability to contribute to a Roth IRA?

You are allowed to contribute fully. Signup and view all the answers

What is the modified AGI limit for a qualifying surviving spouse to make a Roth IRA contribution?

$228,000 Signup and view all the answers

What is the consequence of receiving an incorrect Form 1099-K?

Correcting it is not possible without contacting the issuer. Signup and view all the answers

If married filing separately with a modified AGI below which amount, can you contribute to a Roth IRA?

$153,000 Signup and view all the answers

What type of organizations issue Form 1099-K?

Third-party settlement organizations and credit card companies Signup and view all the answers

Which schedule reports wages earned while incarcerated?

Schedule 1 Signup and view all the answers

What is the age requirement for claiming the Earned Income Credit (EIC) without a qualifying child in 2023?

At least age 25 Signup and view all the answers

Which form has a new line 6c with a checkbox for taxpayers?

Form 1040 Signup and view all the answers

Where are pensions or annuities from a nonqualified deferred compensation plan reported?

Schedule 1 Signup and view all the answers

What type of identity theft involves the use of personal information to commit fraud?

Tax identity theft Signup and view all the answers

Which of the following IRS online services does not apply for the year 2023?

Identity Protection PIN (IP PIN) Signup and view all the answers

What must taxpayers do to secure their tax records from identity theft?

Monitor personal information usage Signup and view all the answers

What is the reporting requirement for wages earned from a non-governmental section 457 plan?

Included in regular income on Form 1040 Signup and view all the answers

What is the income threshold for married filing jointly if both spouses are under 65?

$27,700 Signup and view all the answers

At what age do you become 65 for tax purposes if born on January 1, 1959?

By the end of 2023 Signup and view all the answers

What is the required income threshold for an individual claiming Head of Household if they are 65 or older?

$22,650 Signup and view all the answers

If a qualifying surviving spouse is 65 or older, what is their income threshold for filing?

$29,200 Signup and view all the answers

What is the income threshold for an individual filing married separately regardless of age?

$5 Signup and view all the answers

What type of income is excluded from gross income calculations for filing purposes?

Social security benefits Signup and view all the answers

Individuals whose spouse has died have special rules regarding which income threshold category?

Qualifying surviving spouse Signup and view all the answers

What significantly affects the filing requirement for residents of Puerto Rico?

Their income sources Signup and view all the answers

What must all six digits of the IP PIN do on an electronic return?

Be entered next to the space provided for the occupation Signup and view all the answers

What happens if an issued IP PIN is not included in an electronic return?

The return will have an invalid signature and be rejected Signup and view all the answers

What is required when a power of attorney signs a return on behalf of a taxpayer?

The POA must be attached to Form 8453 Signup and view all the answers

Where can a taxpayer apply for an IP PIN?

Using the Get an IP PIN tool on IRS.gov Signup and view all the answers

How does the speed and accuracy of e-file return processing compare to paper returns?

E-file is both faster and more accurate than paper returns Signup and view all the answers

What is the initial amount of the Child Tax Credit (CTC) for each qualifying child under age 6 for the year 2023?

$2,000 Signup and view all the answers

Which filing status was renamed to qualifying surviving spouse?

Qualifying widow(er) Signup and view all the answers

At what modified AGI income does the Child Tax Credit (CTC) begin to phase out for individuals?

$200,000 Signup and view all the answers

Which credits for certain self-employed individuals were not extended in 2023?

Credits for sick and family leave Signup and view all the answers

What was removed from Publication 17 in 2023?

Specific chapters from 2019 Signup and view all the answers

What are the rules for filing status for qualifying surviving spouses in 2023?

Have not changed Signup and view all the answers

What is no longer available for self-employed individuals for the year 2023?

Credits for sick and family leave Signup and view all the answers

What type of funds must be invested in to qualify for special rules regarding eligible gains?

Qualified Opportunity Funds Signup and view all the answers

What type of income is explicitly listed under the income categories provided?

Wages and Salaries Signup and view all the answers

Which section addresses the deduction options available for taxpayers?

Standard Deduction and Itemized Deductions Signup and view all the answers

What does the publication state about interpretations of tax laws?

They can be superseded by court decisions. Signup and view all the answers

Which document provides information about taxpayer rights when dealing with the IRS?

Your Rights as a Taxpayer Signup and view all the answers

In what context does the publication allow for reprinting its material?

Freely, with a citation to the publication. Signup and view all the answers

What is a primary focus of the section dealing with income adjustments?

To outline permissible income deductions. Signup and view all the answers

Which form of income is categorized under 'Other Income'?

Gambling Winnings Signup and view all the answers

What does the section about IRAs specifically address?

Contribution Limits and Rules Signup and view all the answers

What determines whether a child under 24 must file a tax return based on their income?

Whether they are a full-time student Signup and view all the answers

What is required for a parent to include a child's income on their own tax return?

The child must be under age 19 or a full-time student under age 24 Signup and view all the answers

What classification is applied to aliens that influences tax return filing?

Resident, nonresident, and dual-status Signup and view all the answers

If a resident alien must file a tax return, which rules do they follow?

The same rules as U.S. citizens Signup and view all the answers

What income must be included in gross income for tax filing purposes?

All income received abroad, minus expenses Signup and view all the answers

What age must a child be for a parent to elect to include their income on the parent's return?

Under age 19 or a full-time student under age 24 Signup and view all the answers

What determines the filing requirements for U.S. citizens living abroad?

Their residency status and gross income Signup and view all the answers

What special publication can provide information on alien status for tax purposes?

Pub. 519 Signup and view all the answers

What reporting line will be used to claim the credit for previously owned clean vehicles in 2023?

Line 6m Signup and view all the answers

Which of the following is an exception to the 10% additional tax for early distributions starting from December 29, 2022?

Distributions made due to terminal illness Signup and view all the answers

What is the purpose of Line 13c in the discussed tax changes?

To report the elective payment election amount from Form 3800 Signup and view all the answers

What new reporting requirement started in 2023 regarding corrective IRA distributions?

They are not subject to the 10% early distribution tax Signup and view all the answers

Which of the following tax changes took effect in 2023?

New credits for qualified sick and family leave wages Signup and view all the answers

What online resource is recommended for the latest tax law information?

IRS.gov/Pub17 Signup and view all the answers

How are distributions from a retirement plan attributed to federally declared disasters treated after 2022?

The 10% additional tax does not apply Signup and view all the answers

What is the maximum amount of clean vehicle credit for previously owned clean vehicles for 2023?

$7,500 Signup and view all the answers

What type of wages were introduced for credit eligibility in 2023?

Qualified sick and family leave wages Signup and view all the answers

For tax year 2023, what is the per mile reimbursement rate for using a car for medical reasons?

22 cents Signup and view all the answers

From which form do you report the clean vehicle credit?

Form 8936 Signup and view all the answers

What is the dollar limit for voluntary employee salary reductions for health FSAs beginning in 2023?

$3,050 Signup and view all the answers

What is the modified AGI limit for contributions to a traditional IRA if you are covered by a retirement plan at work in 2023?

More than $116,000 but less than $136,000 Signup and view all the answers

When can you elect to make a one-time distribution up to $50,000 from a traditional IRA to charities?

Beginning in 2023 Signup and view all the answers

What is the increase in required minimum distribution age announced for 2023?

Age 72 Signup and view all the answers

Which form details the maximum credit amount for clean vehicles and allows for its reporting?

Form 8936 Signup and view all the answers

What is the income threshold for a married couple filing jointly if both spouses are under 65?

$27,700 Signup and view all the answers

At what income level must an individual who is 65 or older file a return if they are the head of household?

$22,650 Signup and view all the answers

What is the income threshold for a qualifying surviving spouse who is 65 or older?

$29,200 Signup and view all the answers

If you are filing married separately, what is the income threshold irrespective of age?

$5 Signup and view all the answers

What income level must individuals who are 65 or older file if married filing jointly?

$30,700 Signup and view all the answers

Which category has a special rule regarding income thresholds for filing due to the death of a spouse?

Qualifying surviving spouse Signup and view all the answers

What is the filing requirement income threshold for individuals 65 or older filing as head of household?

$22,650 Signup and view all the answers

Which income type is generally not included in gross income calculations for filing purposes?

Social Security benefits Signup and view all the answers

Study Notes

Roth IRA Contribution Limits

Modified AGI limit for making Roth IRA contributions is set at $218,000.
Contribution eligibility phases out completely at a modified AGI of $228,000.
For married filing separately, the contribution begins to phase out at 138,000andisdisallowedat138,000 and is disallowed at 138,000andisdisallowedat153,000.

Tax Year 2024 AGI Limits

Modified AGI limits for Roth IRA contributions for 2024 are expected to be 578,150formarriedfilingjointlyand578,150 for married filing jointly and 578,150formarriedfilingjointlyand1,156,300 for surviving spouses.

Child Tax Credit (CTC) Adjustments

The initial amount of the CTC is $2,000 for each qualifying child under age 18.
The CTC begins to phase out at a modified AGI of 200,000forsinglefilersand200,000 for single filers and 200,000forsinglefilersand400,000 for married couples filing jointly.

Tax Credits for Self-Employed Individuals

Credits for sick and family leave for self-employed individuals were not extended and are unavailable for 2023.

Reporting Changes

New line added on Schedule 1 for reporting wages earned while incarcerated.
Form 1099-K issued by third-party settlement organizations and credit card companies must be correct; discrepancies should be reported to the issuer rather than the IRS.

Identity Verification Measures

Enhanced IRS identity verification systems have been launched to protect taxpayer information from identity theft.
Taxpayers can access online services such as the Get Transcript Online and the Child Tax Credit Update Portal with an Identity Protection PIN (IP PIN).

Filing Requirements

Taxpayers must file if they meet certain gross income thresholds specific to filing status and age.
Gross income includes money, goods, property, and non-exempt services, and does not typically include Social Security benefits unless specified.

Age Considerations for Filing

Taxpayers age 65 or older have different income thresholds for filing requirements.
The threshold gross income for married filing jointly with both spouses aged 65 or older is $30,700.

Power of Attorney Protocol

A Power of Attorney (POA) must be attached to Form 8453 if someone else is signing a tax return on a taxpayer's behalf.

Income and Adjustments to Income

Discusses various types of income such as wages, salaries, interest, and Social Security benefits.
Includes guidelines for reporting income from different sources like Individual Retirement Arrangements (IRAs).
Details deductions and adjustments to income, which can influence taxable income.

Tax Rate Schedules

Provides an outline of tax rate schedules for the year 2023.
Details vary depending on filing status (e.g., single, married filing jointly).

Taxpayer Rights

Outlines the rights of taxpayers during interactions with the IRS.
Emphasizes the importance of being informed about these rights to ensure fair treatment.

Filing Requirements

Citizens and residents of the U.S. and Puerto Rico must file tax returns if they meet specific income thresholds.
Special considerations are made for aliens, including resident, nonresident, or dual-status classifications.

Income Considerations for Children

Children may have income (e.g., interest, dividends) reported on their parent's return under certain conditions, allowing for potential tax benefits.
The rules apply primarily to children under 19 or full-time students under 24.

Recent Changes in Tax Laws

New regulations and updates affecting filing and tax credits are highlighted, specifically those effective in 2023.
Clean vehicle credit for previously owned electric vehicles includes new qualifications and reporting requirements.

Retirement Plans and Distributions

Provides guidelines for early distributions from retirement accounts, highlighting exceptions to additional taxes.
Discusses qualified charitable distributions from IRAs and health flexible spending accounts.

Filing Status and Income Limits

Comprehensively explains eligibility and deductions related to traditional IRAs based on modified adjusted gross income (AGI).
Joint and separate filing statuses have specific income thresholds that affect deductions and credits.

Reporting Requirements for Different Ages

Breakdown of filing requirements based on age, marital status, and dependency status.
Includes specific gross income thresholds for various categories (e.g., head of household, qualifying surviving spouse).

Additional Resources

Encourages reference to IRS publications for further information on complex topics.
Highlights the availability of IRS.gov for updates on tax laws and regulations.

Studying That Suits You

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Description

Test your knowledge on Roth IRA contribution limits and tax credit adjustments for the 2024 tax year. This quiz covers topics such as AGI limits for Roth contributions and the Child Tax Credit thresholds. Perfect for individuals looking to understand recent tax changes.