INTUIT ACADEMY 1 CONTINUATION - GROSS INCOME
Sandeep, 70, and Mary, 67, are married. Sandeep's unmarried brother, John, lives with
them. Their daughter is a U.S. citizen who has been living and working abroad for many
years.
Based on this information, which option is correct? - Answer -
Gross Income - Answer -is the sum of the taxpayer's income earned in a year, which
may include salary, dividends, capital gains, interest income, royalties, rental income,
alimony, and retirement distributions.
Certain items subtracted from a taxpayer's gross income to calculate their AGI are
referred to as adjustments to income.
Adjusted gross income (AGI) - Answer -is a figure that the Internal Revenue Service
uses to determine a taxpayer's income tax liability for the year. The IRS calculates it by
subtracting certain adjustments from gross income, such as educator expenses, student
loan interest, and other adjustments.
Common Transactions as Exclusions:
Some common transactions as exclusions or deductions from gross income are: -
Answer -Educator expenses
Self-employment tax
Alimony payments
Early withdrawal penalty
Self-employed health insurance
Charitable contributions
Traditional IRA
Health savings account
Student loan interest
Jury duty
Alimony Payments - Answer -Payment to Spouse
ex-spouse
former spouse
legal separation instrument
What expenses qualify - Answer -remarriage
death
court order
medical bills
housing costs
other expenses
person who is paying alimony will deduct to income
, person who is receiving alimony will treat as a income
what information needed to complete the schedule 1 - Answer -Exact amount, Social
Security number, date of divorce
Before December 31, 2018 - Answer -Taxable consequences of alimony applies to
divorce decrees
Early withdrawal penalty - Answer -early withdrawal, charged , maturity date
expenses qualify : deduct penalties, drawing fundsdeferred interest .
How to report :
Interest income -form 1099-int
Deduction -form 1040 Schedule 1
Self-Employed Health Insurance - Answer -Net profit on schedule c
Deduct the cost
Who is eligible?
Medical, dental, vision, Supplemental, Long term care
self-employed taxpayer, tax payer spouse, tax payer dependents
Other rules: can't
Deduct payments
Participate in health plan- employer, spouses of tax payer employer, employer's of tax
dependent
What is the limit:
net self employment profit
one-half of the self-employment tax
Income Inclusion - Answer -Traditional IRA
HSA
Student Loan Interest-maximum $2500
Income excluded from the IRS's calculation of income tax - Answer -Includes life
insurance death benefit proceeds, child support, welfare, and municipal bond income.
The exclusion rule is generally, if "income" cannot be used as or to acquire food or
shelter, it's not taxable.
Municipal bond income is only excludable up to a point.
Qualified Distributions from Roth IRA - Answer -Taxpayers may take two distributions
from a Roth IRA: qualified and non-qualified. The primary difference is this: qualified
distributions are made after a person reaches age 59½, when the owner of the Roth
IRA has become permanently disabled, or when the owner of the Roth IRA has passed
Sandeep, 70, and Mary, 67, are married. Sandeep's unmarried brother, John, lives with
them. Their daughter is a U.S. citizen who has been living and working abroad for many
years.
Based on this information, which option is correct? - Answer -
Gross Income - Answer -is the sum of the taxpayer's income earned in a year, which
may include salary, dividends, capital gains, interest income, royalties, rental income,
alimony, and retirement distributions.
Certain items subtracted from a taxpayer's gross income to calculate their AGI are
referred to as adjustments to income.
Adjusted gross income (AGI) - Answer -is a figure that the Internal Revenue Service
uses to determine a taxpayer's income tax liability for the year. The IRS calculates it by
subtracting certain adjustments from gross income, such as educator expenses, student
loan interest, and other adjustments.
Common Transactions as Exclusions:
Some common transactions as exclusions or deductions from gross income are: -
Answer -Educator expenses
Self-employment tax
Alimony payments
Early withdrawal penalty
Self-employed health insurance
Charitable contributions
Traditional IRA
Health savings account
Student loan interest
Jury duty
Alimony Payments - Answer -Payment to Spouse
ex-spouse
former spouse
legal separation instrument
What expenses qualify - Answer -remarriage
death
court order
medical bills
housing costs
other expenses
person who is paying alimony will deduct to income
, person who is receiving alimony will treat as a income
what information needed to complete the schedule 1 - Answer -Exact amount, Social
Security number, date of divorce
Before December 31, 2018 - Answer -Taxable consequences of alimony applies to
divorce decrees
Early withdrawal penalty - Answer -early withdrawal, charged , maturity date
expenses qualify : deduct penalties, drawing fundsdeferred interest .
How to report :
Interest income -form 1099-int
Deduction -form 1040 Schedule 1
Self-Employed Health Insurance - Answer -Net profit on schedule c
Deduct the cost
Who is eligible?
Medical, dental, vision, Supplemental, Long term care
self-employed taxpayer, tax payer spouse, tax payer dependents
Other rules: can't
Deduct payments
Participate in health plan- employer, spouses of tax payer employer, employer's of tax
dependent
What is the limit:
net self employment profit
one-half of the self-employment tax
Income Inclusion - Answer -Traditional IRA
HSA
Student Loan Interest-maximum $2500
Income excluded from the IRS's calculation of income tax - Answer -Includes life
insurance death benefit proceeds, child support, welfare, and municipal bond income.
The exclusion rule is generally, if "income" cannot be used as or to acquire food or
shelter, it's not taxable.
Municipal bond income is only excludable up to a point.
Qualified Distributions from Roth IRA - Answer -Taxpayers may take two distributions
from a Roth IRA: qualified and non-qualified. The primary difference is this: qualified
distributions are made after a person reaches age 59½, when the owner of the Roth
IRA has become permanently disabled, or when the owner of the Roth IRA has passed
