EA Unit 1 Section 2

What is the threshold requiring filing of self-employment tax (Schedule SE)?

$400 or more earned income within the year.

What is the threshold requiring issuance of 1099 to subcontractors?

$600 or more in payments to subcontractor within the year.

Self employed farmers report income on which form?

Schedule F.

On which form is self employment tax calculated?

Schedule SE.

What income source is exempt from self employment tax?

Notary income.

What is the threshold requiring tip workers to report tips to employer?

Tips received totaling $20 or more per month.

What is the threshold requiring tip workers to report tips on income tax return?

Tips received totaling $1 or more.

What is code assigned to identify Combat Pay on a W2?

Code Q.

Are Worker’s Compensation receipts reportable, and are they taxable?

Not reportable and not taxable.

What is the threshold requiring for a bank to issue a 1099-INT?

$10 in interest.

What is the threshold of earned interest requiring a TP to report the interest as income?

Any/all interest should be reported as income.

When is Schedule B required to be filed?

When interest and/or dividends received totals $1,500 or more respectively.

When is investment expense not deductible?

When money is borrowed for tax-exempt investments.

At what point do dividends become taxable?

Upon DECLARATION of dividends, regardless of when actually paid.

In what situation are real estate taxes not deductible as an expense?

When delinquent taxes are paid to purchase a home.

What is the basis of a property transferred between spouses?

The original owner’s adjusted basis.

What is the basis of an inherited property?

FMV on date of decedent’s death.

What is the basis of gifted property?

The original owner’s adjusted basis unless it’s immediately sold.

What is the treatment of holding periods when a property is gifted?

The holding period passes on to the gift receiver.

What is the treatment of holding periods when a property is inherited?

Holding periods don’t apply and the inherited property is automatically considered a long-term investment.

How can an estate Alternate Valuation date be obtained?

File form 706 (estate tax return).

How is disability insurance taxed?

• Exempt if TP pays the premiums.

• Partially taxable if partially employer-paid (taxable amount equivalent to employer portion %).

• Fully taxable if fully paid by employer.

If a TP received a 1099 but believes they should have received a W2, what action is needed?

File form SS-8 (Determination of Worker Status).

How are non-dividend distributions treated/taxed?

As a reduction in basis up to the investment amount, and as capital gains thereafter.