REG CPA Exam Question with complete solution 2023

REG CPA Exam Question with complete solution 2023Qualified Higher Education Expense up to $4,000 of tuition and fees for enrollment may be deducted by taxpayers with AGI up to $65,000 1040 Adjustments I EMBRACED Education, Health, and Farm Interest on student loan Employment tax Business expense Rent/Royalty Alimony paid Contributions to retirement Early withdrawal penalty Jury duty pay Education expense Health savings account Farm income Federal and state income tax refunds excluded from a taxpayer's taxable income to the extent that the refund did not reduce the amount of tax for the earlier year interest earned is considered taxable Itemized Deductions COMMITT Charitable contributions Other miscellaneous Miscellaneous expenses - 2% Medical expenses - 10% Interest Taxes Theft or casualty 10% - $100 When must an individual file a tax return? if their income is greater than the sum of their personal exemption plus their standard deduction Kiddie tax child's unearned income ($2,100) about the thresholds is subject to tax at the parents higher rate Social security benefits up to 85% of benefits may be taxable if less than $25,000 provisional income - the person can exclude all SS income provisional income exceeding $60,000 - maximum of 85% inclusion Net operating losses for an individual Carryback 2 years carry forward 20 years student loan interest for higher education $2,500 phase out applies Self employment tax 50% of tax is deductible on return 100% of medical insurance premiums paid for self an family are deductible Moving expenses - 1040 must work at least 39 weeks (9 months) direct costs of moving you and stuff Hobby loss if no profit 3 of 5 years - loss is not deductible and it is considered a hobby loss net income= other income expenses = sch. A misc. 2%