The assessment is a charge to reimburse the county government for the cost of paving the road that provides a direct benefit to each owner’s property. Such assessments are added to the basis of the property and are not allowed as a property tax deduction. c. The city of Asheville charges each residence in the city $10 per month to pick up the trash. The fee to collect the trash is not a tax. The $10 payment provides a specific benefit - the picking up of trash. d. Rory pays $450 of income
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CHAPTER 4 David and Lilly Fernandez have determined their tax liability on their joint tax return to be $1‚740. They have made prepayments of $1‚100 and also have a child tax credit of $1‚000. What is the amount of their tax refund or taxes due? (1)Total tax$1‚740 (2)Child tax credit1‚000 (3)Prepayments1‚100 Tax refund $(360) Explanation: David and Lilly will receive a tax refund of $360 calculated as follows: Tax refund = $1‚740 − $1‚100 − $1‚000 = −$360 Prepayments are fully refundable
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dependent children‚ under 17. Credit $1000 per child. AGI $110000 joint‚ 55000 separate‚ $75000 single. Phased out by $50 each $1000. * Married‚ joint‚ 2 children. AGI $118700. Child tax credit $1550 (1000x2=2000-450) {50x{(118700-110000)/1000]} DEPENDENT CARE CREDIT Under 13/ unable to care for self. If divorced child cant be living with the creditor. Divorced mother with custody may entitle to credit even though child is dependent of father. AGI<$15000‚ child credit is 35% of qualified expenses
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They have itemized deductions of $11‚950 and four exemptions. Assuming an adjusted gross income of $40‚000‚ what is their taxable income for 2011? AGI $ 40‚000.00 Itemized Deduction > Standard (11‚950.00) 4 Exemptions (14‚800.00) Taxable Income $ 13‚250.00 Compute Marie’s taxable income for 2011‚ assuming she is single and claims two dependent children. Her adjusted gross income is $70‚000‚ and she has itemized deductions of $9‚000. AGI $ 70‚000.00 Itemized Deduction > HOH Standard
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specifically allowed as itemized deductions by the tax law are nondeductible. ANS: T Only those personal expenditures that are allowed by the tax law are deductible as itemized deductions. PTS: 1 REF: p. 10-2 2. The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer’s filing status. ANS: F The election to itemize is appropriate when total itemized deductions exceed the standard deduction based on the taxpayer’s filing
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LLC. He will get a deduction from gross income for half of the self employment tax liability on the self employment tax. John currently has a lease payment that provides him a deduction of $42‚000 per year or $3‚500*12 (26 USC § 162 (a) 3) (Law Cornell‚ 2012). He is allowed this deduction since the lease is required for his business to continue‚ and he has no title or equity in the building. If he decides to purchase the building‚ then he will no longer have this deduction. Capital purchases
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indicative of independent contractor (rather than employee) status. True False 1 points Question 4 For self-employed taxpayers‚ travel expenses are not subject to the 2%-of-AGI floor. True False 1 points Question 5 A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction. True False 1 points Question 6 As Christmas presents‚ Lily sends gift certificates (each valued at $25) to Caden (a key client) and to each of his two minor children. Lily
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Chapter 07 Individual Income Tax Computation and Tax Credits True / False Questions 1. Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status. True False 2. The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.
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Tina Li DQ #2-7‚ 2-9‚ 2-10‚ 2-11‚ 2-21 Problems #2-30‚ 2-42‚ 2-44‚ 2-49‚ 2-50‚ 2-52‚ 2-60 7. A) What determines who must file a tax return? Who must file is determined by an individual’s filing status‚ age‚ and earnings (income) they received that year. B) Is an individual required to file a tax return if he or she owes no tax? Yes‚ they are still required to file a tax return if they must file‚ even if he/she owes no tax. 9. Tax rules are often very precise. For example‚ a taxpayer must
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insurance (either due to a deductible‚ co-insurance‚ or co-pay). Her un-reimbursed qualifying medical expenses total $8‚356 and her AGI for 2014 is $45‚000. Assuming she will itemize on her 2014 tax return‚ how much of her medical expenses will she be able to deduct? (5 pts) Medical Expenses | $8‚356 | Less 10% of $45‚000 (AGI) | 4‚500 | Total Medical Expense Deduction | $3‚856 | 4. Heather and Terry have a mortgage on their primary residence of $750‚000‚ and a mortgage on their vacation home
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