The legislative process of a tax bill begins with the...
House Ways and Means Committee
The Sixteenth Amendment granted Congress the right to:
Tax income whatever source derived
Replaced the Internal Revenue Code of 1954 with the Internal Revenue Code of 1987
The Tax Reform Act of 1986
The American Recovery and Reinvestment Act of 2009 did :
enhance the child care credit
expanded energy incentives
created a homebuyer credit
When approving a tax bill and there are differences between the House and Senate versions, the differences are resolved by:
Joint Conference Committee
Net capital gains are taxed at
a maximum rate of 20 percent
The American Taxpayer Relief Act of 2012 :
Sunset the Bush-era
Installed a maximum of 20 percent capital gains tax rate
Extended the American Opportunity Tax Credit
Which is not a capital asset?
stocks
pleasure automobile
bonds
depreciable property
depreciable property
Major features of conduits are
do need to pay taxes
pass through their income to owners
Which relative does not have to live in the same household of the taxpayer claiming head of household filing status?
father
To qualify for head of household rates, which of the following must be present ?
You must be unmarried on the last day of your tax year.
You must maintain a household and contribute over 50 percent of the cost of maintaining the household.
Which of the following individuals are required to file a tax return for 2014? Assume no tax has been withheld.
a. Rebecca, single and with no dependent earned $6,550 for the year.
b. Hugh and Jane are married and file a joint return. They have four child
a. No
b. No, gross income is less
c. Yes because more than $400.
Julian and Georgia file a joint return. They have adjusted gross income of $112,000 and itemized deductions of $12,600. Are they required to use the Tax Rate Schedules or the Tax Tables in computing their income tax?
Tax Tables
AGI $112,000
ID ($12,600)
PE (7,900) (3950 x 2)
Tax income : $91,500
Surviving Spouse : Basic Deduction
$12,400
Head of Household: Basic Deduction
$9,100
Married Filing Separately : Basic Deduction
$6,200
Married Filing Jointly : Basic Deduction
$12,400
Single: Basic Standard Deduction
$6,200
Surviving Spouse: Additional Deductions
$1,200
Head of Household: Additional Deductions
$ 1,550
Married Filing Separately : Additional Deductions
$1,200
Married Filing Jointly : Additional Deductions
$1,200
Single : Additional Deductions
$1,550
Additional Standard Deductions requirements:
The taxpayer and/or spouse has to be:
over the age of 65 years old before the close of the year
blind
if they die it is determined as of the date of death
if they aren't 65 before they die they still don't receive the deduction
Rules for Married Filing Separately
If one spouse itemizes the other one has to also.
Exemptions for taxpayers
the taxpayer is allowed an exemption for the spouse of the taxpayer if a joint return is not filed.
The spouse must have no income for the year and must not be the dependent of another spouse
Gross income test
a taxpayer is allowed an exemption for each dependent whose gross income for the year is less than the personal exemption amount $3950.
Qualifying Child
-The child stays in the home with the taxpayer for more than one half of the taxable year.
-Has to have some relation with the taxpayer : brother, sister, stepson, descendant of the individual
-Provides over half of his or her own support is not considere
Dependent care credit
A child must be under the age of 13
Child tax credit
under the age 17