Exam (elaborations)
AAMS Module 5 Exam Questions and Answers
- Course
- Institution
AAMS Module 5 Exam Questions and Answers
[Show more]
Content preview
AAMS Module 5Gross Income - Answer Income from all sources unless specifically excluded by tax law
Examples of income exclusions - Answer Life insurance proceeds received by reason of death of the insured, muni bond interest, gift/inheritance, workers comp, child support, most scholarships received, and many employee fringe benefits
Deductions for AGI/Above the line deductions - Answer Reduce total income dollar for dollar. Examples: deductible IRA contributions, Keogh contributions for the unincorparted business owner, qualified education interest, alimony paid, self employed health insurance deductions, qualified job related moving expenses, tuition and fees deduction, one half of the self employment tax, and the penalty on early withdwal of savings
Gross Income - Answer Technically, income from all sources, unless specifically excluded. Examples include wages, commissions, tips, honorariums, interest, dividends, net business income, rents, royalties, alimony received, unemployment compensation, gambling income, and partnership income
Total Income - Answer The amount reported about three-fourths of the way down the front of the form 1040. Total income may be thought of as the gross income reduced by all exclusions. Other items that are included in calculating total income are items that reduce the income. Some of these items may include losses from sole proprietorships or up to $3,000 of net capital losses
Adjusted Gross Income - Answer The amount remaining after subtracting adjustments to income
Taxable Income - Answer Adjusted gross income reduced by personal and dependency exemptions and further reduced by the greater of the standard deduction or itemized deductions Adjustments to income - Answer Items that reduce total income to arrive at adjusted gross income. Examples include deductible IRA contributions, self employed health insurance deduction, Keogh contributions, qualified job related moving expenses, alimony paid, and penalties on early withdrawal of
savings. Often referred to as above the line deductions or deductions for AGI
Exclusions - Answer Items of income that represent an economic benefit but are not included as income:
includes life insurance proceeds received, a gift or inheritance received, workers compensation benefits,
child support received, municipal bond interest, and many employee fringe benefits
Personal Exemption - Answer An amount subtracted from adjusted gross income to arrive at taxable income; generally a taxpayer may take a personal exemption for himself or herself, a spouse and dependents
Tax Credit - Answer a dollar for dollar offset against the tax liability
Itemized Deductions - Answer These are deductions for expenses that are generally personal in nature. Examples include deductions for property taxes and mortgage interest on a residence, medical expenses
exceeding 10% of AGI, charitable contributions and investment interest expenses. These often are referred to as below the line deductions or deductions from AGI
Standard Deduction - Answer Refers to an allowance granted to most individuals in lieu of itemizing deductions. A taxpayer has the option of using the greater of total itemized deductions or the standard deduction
What is the Alternative Minimum Tax - Answer The AMT is a tax imposed on individuals who use various deductions, exemptions, and tax sheltering mechanisms as a way of making those individuals pay a minimum amount of tax. Certain tax preference or adjustment items, such as tax exempt interest on qualified private activity municipal bonds, depletion allowances and intangible drilling costs from oil and gas activities, are adjustments to taxable income. The alternative minimum taxable income is taxed at either a 26% or 28% rate
What is the kiddie tax - Answer Under the kiddie tax rules, an individual eligible to be claimed as a dependent may not use his or her own personal exemption. For children subject to the kiddie tax, the first $1,050 of unearned income is sheltered by the child's limited standard deduction; the next $1,050 is
taxed to the child at the child's tax rate (typically 10%). Any unearned income in excess of the first $2,100 is taxed to the child at the parents marginal tax rate. The kiddie tax applies to children under age
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller rosesteva. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62890 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now