Exam 5: Deductions for Individuals and Tax Determination

When should a taxpayer itemize deductions rather than taking the standard deduction?

The deduction for student loan interest has limits placed on it based on the taxpayer's AGI.

Qualifying low-income wage earners may not only deduct their IRA contributions but they may take a credit for their contribution.

Seth and Clara have three dependent children ages 2, 6, and 10. They have AGI of $409,250 in 2018. What is their allowable child tax credit if it begins to phase out at $400,000?

Susan pays $4,700 for daycare for her dependent mother who had a stroke last year. What is her dependent care credit if her AGI is $40,100 if the phaseout begins at $15,000?

What limits are placed on an individual's charitable contribution deduction?

What uses are made of adjusted gross income (AGI) in the individual tax model?

Sales taxes levied on the purchase of depreciable business property are deductible as part of depreciation.

Maurice and Judy (both age 32) have one natural daughter, age 4, and adopted twin boys, age 8. Their adjusted gross income on their joint return is $410,000. If they take the standard deduction, what is their tax liability after any allowable tax credits in 2018 if the child tax credit begins to phase out at $400,000?

Health insurance premiums that are deductible as medical expenses include premiums paid pre-tax through a flexible spending account.

28 The NII tax is assessed on the greater of net investment income or modified adjusted gross income.

A single taxpayer, studying for his master's degree, has an AGI of $58,000. In 2018 he paid $8,000 for college tuition and $2,500 interest on his student loan. In 2018:

To qualify as head of household, the taxpayer must pay more than half of the costs of a home in which a qualifying person lives for the entire year.

What is Cheryl's AGI if she has a taxable salary of $34,000, receives $6,000 of alimony (from a divorce agreement executed in 2017) and $600 of interest on her various savings accounts, contributes $3,000 to her traditional IRA, and paid a $100 penalty for cashing in her Certificates of Deposit early?

Ikito's AGI was $68,000 in 2017 and 2018. His home was broken into and his TV, DVD, VCR and computer were all stolen. The properties had a basis of $15,000 and a current fair market value of $9,000. Later that year, his car was hit by a garbage truck. It cost Ikito $9,000 to have the car repaired. Ikito didn't believe in insurance, so he received no reimbursements. In addition, the garbage company filed for bankruptcy after the accident. How much may Ikito deduct as an itemized deduction if these events occurred in 2018 and if they instead happened in 2017, respectively??

Colin (age 40) is single, itemizes his deductions, and has AGI of $100,000. Colin provided the following information about his cash expenditures for 2018: Interest on American Express card 1,200 Points to refinance his home for 10 years at the end of December 2,600 Mortgage interest payments on $250,000 principal amount 11,800 Real estate taxes 2,100 State income taxes withheld on salary 5,400 Additional state income tax estimated payment 1,200 Contribution to Republican Party 2,000 Contribution to United Way 500 If Colin itemizes, what are his total itemized deductions in 2018:

What is the purpose of preserving the rules for determining who is a dependent?

Margo is single and has twin sons who are freshmen in college and a daughter who is a junior during 2018. Margo also attends the local college and took one graduate course each semester. She pays $4,000 tuition and fees for each of the three children and $1,900 in tuition and fees for her courses. What are her allowable education credits if her AGI is $61,000 and the LLC phaseout range is $57,000-$67,000?

Ethan, age 67, and Abigail, age 64, with good eyesight, are married and file a joint tax return. They have adjusted gross income of $1,200,000 for 2018. They have only $5,000 of itemized deduction, so they claim their standard deduction. How much of their standard deduction is phased out in 2018?

Colin (age 40) is single and itemizes his deductions. His AGI is $100,000. Colin provided the following information about his cash expenditures for 2018: Interest on loan to purchase corporate securities $ 900 Interest on American Express card 1,200 Points to refinance his home at the end of December 2,600 Mortgage interest payments 11,800 Real estate taxes 2,100 State income taxes withheld on salary 5,400 Additional state income tax estimated payment 1,200 Contribution to Republican Party 2,000 Contribution to United Way 500 What is the amount of Colin's deductible interest expense if he received $600 in corporate dividends that are taxed at the 15% tax rate?