ACTG470 Final Exam With
Complete Solution
What are deductions for AGI? - ANSWER deductions taken from gross
income without further limitation
deductions for AGI - ANSWER 1. ordinary and necessary business expenses
2. alimony payments (pre-2019 divorce agreements)
3. capital losses in excess of capital gains (limited to 3,000)
4. 1/2 of self-employment tax
5. interest on student loans (up to $2,500)
6. payments to IRAs (up to 6,500, 13,000 for spousal IRAs)
Interest on loans used for qualified education expenses is deductible for -
ANSWER AGI
qualified education expenses for deductible student loan interest - ANSWER
tuition, fees, books and equipment, room and board while student *for
taxpayer spouse and/or dependents
Loan interest rules - ANSWER 1. limited to 2,500
2. phased out if modified AGI is between 75,000 and 90,000 (or 155,000 and
185,000 for MFJ)
*modified AGI is AGI before student loan interest and tuition and fees*
3. not available if claimed as a dependent or the taxpayer is married filing
, separate
loan interest phaseout% - ANSWER excess MAGI/phaseout range
What are deductions from AGI? - ANSWER deductions of a personal nature
that congress has chosen to allow *standard deduction or itemized
deductions*
examples of itemized deductions - ANSWER 1. medical expenses
2. taxes
3. non-business interest
4. charitable contributions
5. casualty and theft losses
5 filing statuses - ANSWER 1. single
2. MFJ
3. Surviving spouse
4. head of household
5. married, filing separately
the standard deduction consists if two components - ANSWER 1. the basic
standard deduction (BSD), and 2. an additional standard deduction (ASD)
On their own tax return, individuals claimed as dependents have a BSD
limited to the greater of: - ANSWER 1. 1,250 or
2. 400 plus earned income (but not to exceed the normal BSD)
(ASD amounts still available)
Complete Solution
What are deductions for AGI? - ANSWER deductions taken from gross
income without further limitation
deductions for AGI - ANSWER 1. ordinary and necessary business expenses
2. alimony payments (pre-2019 divorce agreements)
3. capital losses in excess of capital gains (limited to 3,000)
4. 1/2 of self-employment tax
5. interest on student loans (up to $2,500)
6. payments to IRAs (up to 6,500, 13,000 for spousal IRAs)
Interest on loans used for qualified education expenses is deductible for -
ANSWER AGI
qualified education expenses for deductible student loan interest - ANSWER
tuition, fees, books and equipment, room and board while student *for
taxpayer spouse and/or dependents
Loan interest rules - ANSWER 1. limited to 2,500
2. phased out if modified AGI is between 75,000 and 90,000 (or 155,000 and
185,000 for MFJ)
*modified AGI is AGI before student loan interest and tuition and fees*
3. not available if claimed as a dependent or the taxpayer is married filing
, separate
loan interest phaseout% - ANSWER excess MAGI/phaseout range
What are deductions from AGI? - ANSWER deductions of a personal nature
that congress has chosen to allow *standard deduction or itemized
deductions*
examples of itemized deductions - ANSWER 1. medical expenses
2. taxes
3. non-business interest
4. charitable contributions
5. casualty and theft losses
5 filing statuses - ANSWER 1. single
2. MFJ
3. Surviving spouse
4. head of household
5. married, filing separately
the standard deduction consists if two components - ANSWER 1. the basic
standard deduction (BSD), and 2. an additional standard deduction (ASD)
On their own tax return, individuals claimed as dependents have a BSD
limited to the greater of: - ANSWER 1. 1,250 or
2. 400 plus earned income (but not to exceed the normal BSD)
(ASD amounts still available)
