ACTG 470 Midterm 1-2 Test With
Complete Solution
Business expenses for self-employed persons are _______________ for AGI -
ANSWER deductible
where are business expenses for self-employed persons reported? - ANSWER
reported on Schedule C of Form 1040
•Unreimbursed business expenses for employees are generally deductible
from AGI as miscellaneous itemized deductions
(dangerous audit area for IRS)
-^suspended through 2025
the only employee business expenses that are currently deductible are those
that are _______________________________ . - ANSWER reimbursed by an employer
-these expenses, once reimbursed, have no effect on an employee's taxable
income
the following items provided to a worker establish an employee-employer
relationship: - ANSWER •Allowing participation in various workplace fringe
benefits
•Furnishing tools or equipment and a place of work (ex: get a desk)
•Payments made based on time spent rather than task performed
•Providing support services, including the hiring of assistants to help do the
work
,•Training the worker to obtain needed job skills
provide an example of employee-employer relationship: furnishing tools or
equipment - ANSWER ex: a desk for you is provided
provide an example of employee-employer relationship: payments? -
ANSWER payments made based on time spent rather than task performed
would employers would prefer independent contractors or employees? -
ANSWER independent contractors
-no payroll taxes, health insurance, all benefits, vacation and sick time
An insurance premium is ... - ANSWER the amount you pay each month (or
each year) to keep your insurance policy active
example of this. Rentals electrical works for a building. Are the construction
workers employees or independent contractors - ANSWER they are the
independent contractor because they are not employees of the building
owner.
premiums paid by employer for insurance coverage of employee, spouse, and
dependents are _________________ by the employer and ____________________ from
the employee's income - ANSWER deductible, excluded
most Uber drivers would b considered... - ANSWER independent contractors
payments for the permanent loss or the loss of the use of a member or
function of the body or the permanent disfigurement of the employee, the
spouse, or a dependent are _____________________ . [taxable/not taxable] -
ANSWER not taxable
what do we do with amounts received for medical expenses that were
,deductible on a prior return? - ANSWER amounts received for medical
expenses that were deducted on a prior return must be included in gross
income
one way to provide a medical reimbursement plan for employees is as
follows... - ANSWER the employer purchases a medical insurance plan with a
high deductible and then makes contributions to the employee's Health
Savings Account (HSA)
Health Savings Account (HSA) - ANSWER Tax-sheltered savings account
similar to an IRA but created primarily to pay for medical expenses.
employer's contribution to HSA and earnings on funds in the account are
__________________ . - ANSWER excludible
•Contributions limited to 100 percent of deductible amount for individual or
family coverage
monthly deductible amount is limited to one-twelfth of ______________ under a
high-deductible plan for self-only coverage (IF YOUR SINGLE) and
one-twelfth of $7,750 for an individual who has family coverage) - ANSWER
Annual amounts:
$3,850, $7,750
•Withdrawals from HSA must be used to reimburse the employee for the
medical expenses paid by the employee that are not covered under the
high-deductible plan
Meals are not taxable to the employee IF: - ANSWER Furnished by the
employer
•On the employer's business premises
, •For the convenience of the employer
Lodging is not taxable to the employee IF:
(think of hotel/motel) - ANSWER In case of lodging, the employee is required
to accept the lodging as a condition of employment
from 2018 to 2025, the employer may only deduct _______ percent of the cost
of the meals provided. after 2025, employers ______________ [may/may not]
claim any deduction for these meals - ANSWER 50, may not
on the employer's business premises requirement, applicable to both meals
and lodging, define business premises as simply... - ANSWER "the place of
employment of the employee"
convenience of the employer test is intended to focus on the
___________________________ for furnishing the meals and lodging rather than on
the benefits received by the employee - ANSWER employer's motivation
Required as a condition of employment test applies only to lodging... -
ANSWER if the employee's use of the housing would serve the convenience
of the employer but the employee is not required to use the housing, the
exclusion is not available
-employers are 100% tax deductible
how do employers account for the first $50,000 of premiums on group life
term insurance? - ANSWER premiums on the first $50,000 of group term life
insurance are excluded from gross income
•For each $1,000 of coverage in excess of $50,000, the employee must
include the amounts calculated using the IRS tables (see page 11-9)
Complete Solution
Business expenses for self-employed persons are _______________ for AGI -
ANSWER deductible
where are business expenses for self-employed persons reported? - ANSWER
reported on Schedule C of Form 1040
•Unreimbursed business expenses for employees are generally deductible
from AGI as miscellaneous itemized deductions
(dangerous audit area for IRS)
-^suspended through 2025
the only employee business expenses that are currently deductible are those
that are _______________________________ . - ANSWER reimbursed by an employer
-these expenses, once reimbursed, have no effect on an employee's taxable
income
the following items provided to a worker establish an employee-employer
relationship: - ANSWER •Allowing participation in various workplace fringe
benefits
•Furnishing tools or equipment and a place of work (ex: get a desk)
•Payments made based on time spent rather than task performed
•Providing support services, including the hiring of assistants to help do the
work
,•Training the worker to obtain needed job skills
provide an example of employee-employer relationship: furnishing tools or
equipment - ANSWER ex: a desk for you is provided
provide an example of employee-employer relationship: payments? -
ANSWER payments made based on time spent rather than task performed
would employers would prefer independent contractors or employees? -
ANSWER independent contractors
-no payroll taxes, health insurance, all benefits, vacation and sick time
An insurance premium is ... - ANSWER the amount you pay each month (or
each year) to keep your insurance policy active
example of this. Rentals electrical works for a building. Are the construction
workers employees or independent contractors - ANSWER they are the
independent contractor because they are not employees of the building
owner.
premiums paid by employer for insurance coverage of employee, spouse, and
dependents are _________________ by the employer and ____________________ from
the employee's income - ANSWER deductible, excluded
most Uber drivers would b considered... - ANSWER independent contractors
payments for the permanent loss or the loss of the use of a member or
function of the body or the permanent disfigurement of the employee, the
spouse, or a dependent are _____________________ . [taxable/not taxable] -
ANSWER not taxable
what do we do with amounts received for medical expenses that were
,deductible on a prior return? - ANSWER amounts received for medical
expenses that were deducted on a prior return must be included in gross
income
one way to provide a medical reimbursement plan for employees is as
follows... - ANSWER the employer purchases a medical insurance plan with a
high deductible and then makes contributions to the employee's Health
Savings Account (HSA)
Health Savings Account (HSA) - ANSWER Tax-sheltered savings account
similar to an IRA but created primarily to pay for medical expenses.
employer's contribution to HSA and earnings on funds in the account are
__________________ . - ANSWER excludible
•Contributions limited to 100 percent of deductible amount for individual or
family coverage
monthly deductible amount is limited to one-twelfth of ______________ under a
high-deductible plan for self-only coverage (IF YOUR SINGLE) and
one-twelfth of $7,750 for an individual who has family coverage) - ANSWER
Annual amounts:
$3,850, $7,750
•Withdrawals from HSA must be used to reimburse the employee for the
medical expenses paid by the employee that are not covered under the
high-deductible plan
Meals are not taxable to the employee IF: - ANSWER Furnished by the
employer
•On the employer's business premises
, •For the convenience of the employer
Lodging is not taxable to the employee IF:
(think of hotel/motel) - ANSWER In case of lodging, the employee is required
to accept the lodging as a condition of employment
from 2018 to 2025, the employer may only deduct _______ percent of the cost
of the meals provided. after 2025, employers ______________ [may/may not]
claim any deduction for these meals - ANSWER 50, may not
on the employer's business premises requirement, applicable to both meals
and lodging, define business premises as simply... - ANSWER "the place of
employment of the employee"
convenience of the employer test is intended to focus on the
___________________________ for furnishing the meals and lodging rather than on
the benefits received by the employee - ANSWER employer's motivation
Required as a condition of employment test applies only to lodging... -
ANSWER if the employee's use of the housing would serve the convenience
of the employer but the employee is not required to use the housing, the
exclusion is not available
-employers are 100% tax deductible
how do employers account for the first $50,000 of premiums on group life
term insurance? - ANSWER premiums on the first $50,000 of group term life
insurance are excluded from gross income
•For each $1,000 of coverage in excess of $50,000, the employee must
include the amounts calculated using the IRS tables (see page 11-9)
