ACC 317 EXAM 1 QUESTIONS AND ANSWERS 2024

Gross Income Examples -wages/salary -Earned interest - dividends - capital GAINS - QBI - Rent Income - Farmers Income Gross Income the total amount of money made in one year by a person, household, or family unit Brainpower Read More Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:00 Full screen Excluded from Gross Income - Gift - inheritance - Child support payments - Life Insurance paid on death - Welfare payments - Interest from state/local bonds For AGI deductions deductions that are subtracted from gross income to determine AGI. For AGI deductions include -Capital LOSS ($3000 MAX) - 1/2 self employment tax - tuition deduction -Contributions to IRA or 401k -Alimony paid (BEFORE 2019) From AGI deduction Standard deduction or Itemized Deduction (GREATER OF THE TWO) Itemized Deductions Examples - Medical Expenses - State/Local withholding tax - real estate tax - mortgage interest - Charitable contributions Medical expense deduction only deductible only if they exceed 7.5% of AGI QBI Deduction amount received * 20% State/Local Withholding tax/Real estate Tax/ Perasonal Property tax These can NOT exceed $10,000 Taxable Income Gross Income - "For" AGI Deductions - "From AGI Deductions = Qualifying Relative Must pass ALL test: - Relationship - Gross Income - Support Qualifying Child To be a qualifying child, the dependent must meet eight tests: (1) relationship (2) age (3) residence (4) support (5) citizenship or residency (6) joint return (7) qualifying child of more than one person (8) dependent taxpayer. QC relationship test Must be taxpayer's -son/daughter (step) - Brother/Sister (Half/step) - Grandchild, nephew, niece (NO COUSINS) - Adopted child/Foster child QC Abode Test QC must live with tax payer for HALF OF THE YEAR Excluded - college, military, illness, business QC Age Test Must be under the age of 19 or under 24/Full time student QC must be YOUNGER than tax payer Excludes- disable children QC Support Test QC must NOT provide more than half of their support/can NOT be self-supporting - SCHOLARSHIPS ARE NOT INCLUDED FOR ACTUAL CHILDREN OF TAX PAYER Tie-Breaker Rules for Dependents (1) If only one person is the child's parent, the child is treated as the qualifying child of the parent. (2) If both persons are the parent, and the child lives longer with one parent then person they live with the longest can claim them (3) f both persons are the parent, and the child lives longer with both the same amount of time, the child is treated as the QC of the person with the highest AGI for the year. (4) Tax payer is NOT the parents, the child is treated as the QC of the person who had the highest AGI for the year. QR relationship test - person who is a child that doesn't qualify as QC (24 child) - same as QC -father/mother/grand parent -aunt/uncle -friends (must live with tax payer the ENTIRE year) QR Gross income test Dependent gross include must be below 2020 $4,300 QR Support test -tax payer must provide more than 50% of support -Scholarships are considered if not actual child -includes tax exempt income (welfare/SS/nontaxable pensions) Multiple Support Agreement This requires that over 50 percent of the support of the potential dependent be provided by the taxpayer. Where no one person provides more than 50 percent of the support, enables a taxpayer to still qualify for the dependency exemption. Any person who contributed more than 10 percent of the support is entitled to claim the exemption if each person in the group who contributed more than 10 percent files a written consent (Form 2120). Each person who is a party to the multiple support agreement must meet all of the other requirements for claiming the dependency exemption. § 152(c). - CANNOT BE FRIENDS Joint relationship test Dependent can not file joint w