Question

For answers submitted, I live in Albany, NY. I must follow NYS guidelines for all questions. If you have any questions, please do not hesitate to contact me.

11. An unmarried taxpayer itemized deductions in 20x1. The taxpayer's itemized deductions were $6,850; the standard deduction amount that year was $6,300. Included in the taxpayer's itemized deductions were $3,700 of state income tax withheld. In 20x2, the taxpayer receives an $800 refund check from the state government. What amount must the taxpayer include in gross income in 20x2?

12. Joe is a married taxpayer who files separately from his spouse. He has modified AGI of $125,000 (including $2,500 of net investment income). His net investment income (NII) tax is? 13. Melanie's taxable income falls in the 37% tax bracket. Included in her taxable income is $15,000 of ordinary dividends, all of which are qualified dividends. The amount of tax Melanie will pay on her qualified dividends is?

14. John pays his former wife Rose $3,100 in alimony and $400 in child support each month. Assuming John makes all 12 payments during the year, how much of the $42,000 must Rose include in gross income?

15. For cash basis taxpayers, interest earned on US Savings bonds is? A) Fully taxable; the interest may be reported in the year earned or in the year the bond is redeemed (as long as the taxpayer chooses the same treatment for all savings bonds they own) B) Not taxable C) Fully taxable, and must be reported in the year that it is earned D) Fully taxable, and must be reported in the year the bond is redeemed

16. Is illegal income taxable or not taxable?

17. Without regard to any AGI limitation, child support is? A) Deductible for the spouse paying it; taxable for the spouse receiving it B) Not deductible for the spouse paying it; taxable for the spouse receiving it C) Not deductible for the spouse paying it; not taxable for the spouse receiving it D) Deductible for the spouse paying it; not taxable for the spouse receiving it

18. Jim and Kathy file a joint return; they have modified AGI of $260,000 (including $15,000 of net investment income). Their net investment income (NII) tax is?

19. Are tips of $10 taxable or not taxable?

Answer 1

11. The taxpayer has claimed itemized deductions in last year which includes state tax of $3,700. When taxpayer claims itemized deduction then the refund received in the following year is taxable. Therefore, $800 needs to be included in Gross Income in 20x2.

12. Investment Income Tax is calculated if

In the case of an individual, the NIIT is 3.8 percent on the lesser of:

• the net investment income, or
• the excess of modified adjusted gross income over the following threshold amounts:
  • $250,000 for married filing jointly or qualifying widow(er)
  • $125,000 for married filing separately
  • $200,000 in all other cases
• Net Investment Income = $ 2500
• Tax @ 3.8% = $95

13. Ordinary Dividends are taxable at lower rate:

For 37% tax bracket, dividend are taxable at 20-23.8% (3.8% Net Investment Income tax enacted in 2013)

Tax amount = $15,000 * 20% = $3,000