Enrolled Agent Exam Part 1 Rated A+
Alimony -- If the payor must pay mortgage payments and the home is jointly owned,
how much is deductible by the taxpayer? - ANSWER-50% of mortgage payments can
be deducted and the payee spouse must 50% of the payments in income. The taxpayer
can also claim 50% of the interest paid as an itemized deduction.
Alimony -- If the payor must pay real estate taxes and home insurance and the house is
"held as tenants by the entirety" or "joint tenants", how much is deductible? - ANSWER-
None of the total payments are deductible by payor/gross income to payee. All of the
real estate taxes are deductible as an itemized deduction. none of the home insurance
is deductible as an itemized deduction.
Alimony -- If the payor must pay real estate taxes and home insurance and the house is
"held as tenants in common", how much is deductible? How much must be included in
alimony income by the payee? - ANSWER-Half of the total payments are deductible by
payor/gross income to payee. Half of the real estate taxes are deductible as an itemized
deduction. none of the home insurance is deductible as an itemized deduction.
American Opportunity Credit - ANSWER-$2500/student for first 4 years of
postsecondary education. 100% of first $2000 qualified expenses and 25% of the next
$2000 of qualified expenses
Phases out between $80,000 and $90,000 for singles and between $160,000 and
$180,000 on a joint return.
Up to 40% of the credit is refundable.
Are benefits from a health and accident plan included in gross income if paid by
employer? - ANSWER-No (if you received a physical injury in connection with the
benefits)
Are entertainment expenses deductible? - ANSWER-No
Are event tickets deductible as business gift expense? - ANSWER-Yes if the amount
per individual donee per year is limited to $25. Also, adequate records must be
maintained.
Are punitive damages included in gross income? - ANSWER-Yes (unless you received
a physical injury in connection with the punitive damages)
Can unpaid alimony or child support be deducted as a nonbusiness bad debt? -
ANSWER-No. Cannot be a bad debt unless it becomes completely worthless.
, Child Tax Credit --Qualifying Child - ANSWER-a. taxpayer's son, daughter, stepchild,
foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a
descendant of any of them.
b. under age 17 at the end of 2018.
c. did not provide over half of his or her own support for 2018
d. lived with the taxpayer for more than half of 2018 --counts if child died/was born and
lived with tpayer more than half the time alive, temporary absences also allowed.
e. is claimed as a dependent on the taxpayer's return
f. does not file a joint return for the year (or files only to claim refund or estimated tax
paid)
g. was a U.S. citizen, a U.S. national, or a U.S. resident alien
Child Tax Credit Amounts - ANSWER-$2000 2018 to 2025. Additional Child Tax Credit
is for individuals who get less than the full amount of CTC. The ACTC may give the
taxpayer a refund even if the taxpayer does not owe any tax. ACTC is refundable up to
15% of earned income in excess of $2500. Capped at $1400. Schedule 8812.
Phased out when AGI reaches $400,000 for MFJ or $200,000 all others. Credit is
reduced by $50 for each $1000 (or part thereof) by which AGI exceeds threshold.
There is also a $500 nonrefundable credit for dependents other than a qualifying child
or for qualifying child without required SSN.
Credit for Elderly or Disabled - ANSWER-15% times base amount which is $5000 for
singles $7500 for MFJ, and $3750 MFS. Limited to disability income if under age 65.
Base amount is reduced by tax exempt social security benefits, pension/annuity
excluded from GI, one half of excess AGI over $7500 for singles $10,000 for MFJ. MFS
who lives with spouse cannot claim.
Credit for Elderly or Disabled -- AGI Cutoff - ANSWER-Single, HOH, Qualifying
Widower $17,500
MFJ -- one qualified spouse. $20,000
MFJ -- both qualified -- $25,000
MFS -- $12,500
Also cannot claim if taxpayer's retirement is equal to base amount
Alimony -- If the payor must pay mortgage payments and the home is jointly owned,
how much is deductible by the taxpayer? - ANSWER-50% of mortgage payments can
be deducted and the payee spouse must 50% of the payments in income. The taxpayer
can also claim 50% of the interest paid as an itemized deduction.
Alimony -- If the payor must pay real estate taxes and home insurance and the house is
"held as tenants by the entirety" or "joint tenants", how much is deductible? - ANSWER-
None of the total payments are deductible by payor/gross income to payee. All of the
real estate taxes are deductible as an itemized deduction. none of the home insurance
is deductible as an itemized deduction.
Alimony -- If the payor must pay real estate taxes and home insurance and the house is
"held as tenants in common", how much is deductible? How much must be included in
alimony income by the payee? - ANSWER-Half of the total payments are deductible by
payor/gross income to payee. Half of the real estate taxes are deductible as an itemized
deduction. none of the home insurance is deductible as an itemized deduction.
American Opportunity Credit - ANSWER-$2500/student for first 4 years of
postsecondary education. 100% of first $2000 qualified expenses and 25% of the next
$2000 of qualified expenses
Phases out between $80,000 and $90,000 for singles and between $160,000 and
$180,000 on a joint return.
Up to 40% of the credit is refundable.
Are benefits from a health and accident plan included in gross income if paid by
employer? - ANSWER-No (if you received a physical injury in connection with the
benefits)
Are entertainment expenses deductible? - ANSWER-No
Are event tickets deductible as business gift expense? - ANSWER-Yes if the amount
per individual donee per year is limited to $25. Also, adequate records must be
maintained.
Are punitive damages included in gross income? - ANSWER-Yes (unless you received
a physical injury in connection with the punitive damages)
Can unpaid alimony or child support be deducted as a nonbusiness bad debt? -
ANSWER-No. Cannot be a bad debt unless it becomes completely worthless.
, Child Tax Credit --Qualifying Child - ANSWER-a. taxpayer's son, daughter, stepchild,
foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a
descendant of any of them.
b. under age 17 at the end of 2018.
c. did not provide over half of his or her own support for 2018
d. lived with the taxpayer for more than half of 2018 --counts if child died/was born and
lived with tpayer more than half the time alive, temporary absences also allowed.
e. is claimed as a dependent on the taxpayer's return
f. does not file a joint return for the year (or files only to claim refund or estimated tax
paid)
g. was a U.S. citizen, a U.S. national, or a U.S. resident alien
Child Tax Credit Amounts - ANSWER-$2000 2018 to 2025. Additional Child Tax Credit
is for individuals who get less than the full amount of CTC. The ACTC may give the
taxpayer a refund even if the taxpayer does not owe any tax. ACTC is refundable up to
15% of earned income in excess of $2500. Capped at $1400. Schedule 8812.
Phased out when AGI reaches $400,000 for MFJ or $200,000 all others. Credit is
reduced by $50 for each $1000 (or part thereof) by which AGI exceeds threshold.
There is also a $500 nonrefundable credit for dependents other than a qualifying child
or for qualifying child without required SSN.
Credit for Elderly or Disabled - ANSWER-15% times base amount which is $5000 for
singles $7500 for MFJ, and $3750 MFS. Limited to disability income if under age 65.
Base amount is reduced by tax exempt social security benefits, pension/annuity
excluded from GI, one half of excess AGI over $7500 for singles $10,000 for MFJ. MFS
who lives with spouse cannot claim.
Credit for Elderly or Disabled -- AGI Cutoff - ANSWER-Single, HOH, Qualifying
Widower $17,500
MFJ -- one qualified spouse. $20,000
MFJ -- both qualified -- $25,000
MFS -- $12,500
Also cannot claim if taxpayer's retirement is equal to base amount
