ACA1 Tax Treatments for Individual Returns (Task 302.2.3) A. Recommended Tax Filing Status From the two filing statuses that the couple can use, the most advantageous for them would be married filing jointly and not married filing separately. A1. Explain your recommendation based on current, applicable tax laws. The reason that using the married filing jointly status is more advantageous for the couple is that taxes will be lower than if they filed as married filing separately. Filing jointly provides more tax benefits and the tax rate is generally lower. They will qualify for five exemptions, one for each of the dependent children, all under the age of 19 and that they provide over half the support for, and one personal …show more content…
The couple can exclude the full $296,000 gain since they are filing jointly and per the IRS can exclude up to $500,000. A2d. Partnership Income and Losses Partnerships use form 1065 to report income and losses, but taxes are not collected or paid from it, instead, the partners pay the taxes on their own personal tax returns. Each partner is allocated their share of the income/loss according to the partnership agreement. This is done through a schedule K-1. In this case, Spouse A will report $142,000 as income on the couple’s 1040. The couple will not be taxed on the cash withdrawal of $83,500, since partners are not taxed when they receive a withdrawal or distribution, unless it exceeded the partner’s basis. A2e. Passive Activity Gains and Losses The passive activity rules apply to Individuals, estates, trusts (other than grantor trusts), personal service corporations, and, closely held corporations. (IRS Publication 925) As defined by the IRS, a passive activity is a business activity in which the investor or business owner has the potential to profit but in which the individual does not materially or physically participate. A material participation in a business activity means that the individual participates on a "regular, continuous, and substantial" basis (as defined by the IRS). (Jean Murray, Passive Activity) The couple had two passive activities, both of which we rental activities. Per the IRS, A rental activity is a passive
Sale of rental property does not qualify for exclusion 121 because the two year resident occupation limit cannot be satisfied in income producing business property. The sale will fall under section 1231 which encompasses transactions of sales or exchanges of business property held for longer than one year. In order to determine treatment of section 1231 you must combine all section 1231 gains and losses for the year. A net loss is an ordinary loss. A net gain is ordinary income up to the amount of your non-recaptured section 1231 losses from previous years. Any remaining balance becomes a long-term capital gain. The formula for calculating gain or loss involves subtracting the cost basis from the selling price. If you have taken depreciation on the property in the past and are
CONCLUSION: Jackie’s Social Security benefits must be reported as taxable income to the IRS, and the treatment heavily depends on her filing status. If Jackie files a joint return to
Company S is a new manufacturer entering the scooter market. The company’s objective is to motivate dealerships as intermediaries. Company S wants the existing scooter dealerships to sell its product instead of the competitions. The company will motivate the dealerships as intermediaries through Incentive Programs, Profit Opportunities, Sales Quotas, Decision Making, and Frequent/Timely Delivery.
Trinity Hospitals five year plan includes development of an orthopedic center, cardiovascular center and a cancer center. Task four asks for an assessment of the viability of one of these service lines. By assuming the role of the hospital CEO, I will evaluate the orthopedic center service line and present the findings to the board of directors for their approval.
The other option afforded to the Ouray’s is to file separately as a married couple. Filing separately can be advantages under special circumstances. However, if the couple was to file separately, there are several restrictions. First being, that if one spouse cannot demonstrate more than one-half of a child’s support is provided by them, a multiple-support agreement must be filed. Next, if one taxpayer itemizes their deductions they must both take itemized deduction and same goes if one person takes a standard deduction, the other must as well. If filing status was to be separate, neither spouse can claim the earned income credit and the credit for child and dependent care expenses. Next, no deduction is allowed for the interest paid on educations loans, and only $1,500 of excess capital losses can be claimed by each person.
The following article interests me in Child Tax Credit. I am a family man with six children and placed high values upon my children’s welfare. The Internal Revenue Service (IRS) offers assists to those with a large family to support.
This ePortfolio is a collection of the progress that I have made in my ENC 1102 class at the University of Central Florida. Throughout the semester I have grown as a writer as I have learned how to conduct research on a specific community to support my central argument and how to evaluate each aspect of my research process through the analysis of multiple complex texts. I have also learned how to interpret my research findings to produce an argument that matters to my community and how to effectively reflect over the research methods that I used. Throughout the course I have been successful in creating a research process specific to my community, interpreting my research findings, and creating a valid argument for my research,
John Smith will be taxed on his income of $300,000 regardless if he received the amount as a lump sum or in annuity. The constructive receipt doctrine states that “…
6. The minimum AMT exemption amount for a child whose unearned income is taxed at the parents' tax rate has increased to $6,700 for 2010.
On the other end, federal employee benefits and military benefits doesn’t depend on where the couple lives. All legally married same-sex couples that live anywhere in the United States qualify for these federal benefits: federal employee, military, and immigration status.
At this point in history no provision for a marital deduction had been made and as a result, residents of community property states were at an advantage over residents of common law states. In community property states, marital estates were split in half to create a low overall tax burden. It was not until 1948 that the estate tax code was amended to reduce these tax
Studies continue to demonstrate that people who marry tend to be better off with financial and medical health. One of the most important aspects of gay marriage is that it establishes legal rights for couples which makes it easier for people to make social and legal commitments for one another. Most of the rights and privileges that go with marriage are the ways spouses can support one another. Married couples are in a better circumstance together than unmarried couples allowing the ability for those relationships to develop stronger and deeper
File and Suspend have traditionally been used for higher income earning couples where you have a spouse who has not worked or has not paid much into social security so instead of claiming on their own benefit they claim on their spouses. The reason the primary spouse would typically file and suspend was due to continuing to work; so they would file to activate their spouse’s benefits and then suspend so they could continue to crank money into SS while they continue to work.
On the tax issue, both husband and wife stand on the same front. Husband and wife shall pay all costs and expenses. In the event the Internal Revenue Service or any state or local taxing authority provides notice of an audit, deficiency, refund, or other adjustment regarding a tax return that was jointly filed or that should have been jointly filed, husband and wife each agree to notify promptly the other. What is more, who receiving such notice from a taxing authority shall provide a copy of the notice to the other. In any claims for refunds or in defending against any deficiencies that may be determined with respect to joint income tax returns filed (or to be filed) for the calendar year 20 and years prior, Husband and Wife need to
the benefits that married couples receive through the ability to file jointly on their income