adjustments to income
Download
Skip this Video
Download Presentation
Adjustments to Income

Loading in 2 Seconds...

play fullscreen
1 / 27

Adjustments to Income - PowerPoint PPT Presentation


  • 150 Views
  • Uploaded on

Adjustments to Income. Pub 4491 – Page 171 Pub 4012 – Tab E. Total Income minus Adjustments = Adjusted Gross Income (AGI). Adjusted Gross Income. Intake/Interview. In-Scope Adjustments. Educator expenses Health Savings Account* Self-employment tax Early withdrawal penalty Alimony paid.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Adjustments to Income' - eleanor-hanson


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
adjustments to income

Adjustments to Income

Pub 4491 – Page 171Pub 4012 – Tab E

NTTC Training – 2013

adjusted gross income
Total Income minus Adjustments =

Adjusted Gross Income (AGI)

Adjusted Gross Income

NTTC Training – 2013

intake interview
Intake/Interview

NTTC Training – 2013

in scope adjustments
In-Scope Adjustments
  • Educator expenses
  • Health Savings Account*
  • Self-employment tax
  • Early withdrawal penalty
  • Alimony paid
  • IRA contributions
  • Student loan interest
  • Tuition and fees deduction
  • Jury duty pay given to employer

* Optional certification

NTTC Training – 2013

adjustments to income1
Adjustments to Income

Out-of-Scope

NTTC Training – 2013

educator expense line 23
Educator Expense – Line 23
  • Up to $250 for classroom educational materials for taxpayer and $250 for spouse (if both educators). Ask about this if educator(s)
  • Must be K–12 teacher, counselor, principal or aide
  • Must work at least 900 hours during school year
  • Claim entered on 1040 Wkt 2

NTTC Training – 2013

1040 wkt2 in taxwise
1040 Wkt2 in TaxWise

NTTC Training – 2013

health savings accounts
Health Savings Accounts
  • Counselors may obtain special certification to work with Health Savings Accounts (HSAs)
  • Counselors must pass Advanced test before testing on HSA
  • Course and test are in Pub 4942 or online at Link & Learn

NTTC Training – 2013

portion of self employment tax line 27
Portion of Self Employment Tax – Line 27
  • SE Tax = Social Security and Medicare tax for Self-Employed
  • Adjustment comes from Schedule SE
  • Schedule SE automatically generated from Schedule C
  • Details in later lesson

NTTC Training – 2013

early withdrawal penalty line 30
Early Withdrawal Penalty – Line 30
  • Penalty for withdrawal of funds from time deposits, such as CDs
  • As reported on 1099-INT or 1099-OID
  • In TaxWise, flows from Interest Statement

NTTC Training – 2013

alimony paid line 31a
Alimony Paid – Line 31a
  • Allowed if paid under Divorce/Separation Agreement
  • Must provide recipient’s Social Security No.
  • Recipient must claim as income
  • Link to Alimony Paid Worksheet from Line 31 if paid to more than one ex-spouse
  • Child Support not deductible

NTTC Training – 2013

ira contribution line 32
IRA Contribution – Line 32
  • Can contribute lesser of $5,500 ($6,500 if age 50 or over) or taxable compensation
  • Taxable compensation
    • Wages, tips, bonuses, Sch C income, alimony
    • Not interest, dividends, pensions, social security
  • Actual amount depends on Taxpayer/ spouse retirement plans, modified AGI, age and filing status

NTTC Training – 2013

ira contribution line 321
IRA Contribution – Line 32
  • Age limits
    • For traditional IRA – under 70½
    • For Roth IRA – no age limit
  • Note: Roth IRA contribution is not deductible and will not show on line 32

NTTC Training – 2013

ira contribution link to ira worksheet
IRA Contribution – Link to IRA Worksheet

These data entered automatically

ira contribution cont
IRA Contribution (cont)
  • Enter Traditional IRA contributions on line 10
  • If part nondeductible, TW generates Form 8606
  • Enter Roth contributions on line 20
  • Can be a mixture so long as limit is not exceeded

NTTC Training – 2013

non deductible contributions
Non-Deductible Contributions
  • If client participates in employer’s plan and AGI is too high
    • Some or all of Traditional IRA contribution may be nondeductible
  • Client might prefer a Roth IRA instead of a Traditional IRA

NTTC Training – 2013

non deductible contributions1
Non-Deductible Contributions
  • TW adds Form 8606 to form tree
    • Part I is in scope
    • If not carried forward, input beginning of year basis on line 2 (from 2012 Form 8606 line 14)
  • TaxWise carries the deductible amount, if any, to Line 32

NTTC Training – 2013

student loan interest line 33
Student Loan Interest – Line 33
  • Intake and Interview Sheet – Part V, Q8
  • If > $600, should receive Form 1098-E

NTTC Training – 2013

student loan interest line 331
Student Loan Interest – Line 33

Pub 17, Ch 19

  • Interest paid on qualified student loan for post secondary education expenses
  • Qualified Loan:
    • Expenses of taxpayer, spouse, or dependent (when loan originated)
    • For education expenses paid within reasonable time since loan was opened
    • For education provided during academic period when eligible student

NTTC Training – 2013

student loan interest line 332
Student Loan Interest – Line 33
  • Qualified Loan (cont)
    • Loan cannot be from relative
    • Taxpayer cannot be filing MFS
    • Taxpayer cannot be claimed on someone else’s return
    • Loan cannot be from qualified retirement plan
    • Taxpayer must be liable on the loan

NTTC Training – 2013

student loan interest line 333
Student Loan Interest – Line 33
  • Maximum $2,500 per year
  • Phases out as AGI increases
  • Link to 1040 Wkt 2

NTTC Training – 2013

1040 wkt2 in taxwise1
1040 Wkt2 in TaxWise

NTTC Training – 2013

tuition and fees line 34
Tuition and Fees – Line 34
  • Up to $4,000 adjustment allowed
  • For qualified education expenses of higher education
  • One of several choices for education benefits
    • Will cover details in education benefits lesson later

NTTC Training – 2013

jury duty pay given to employer
Jury Duty Pay Given to Employer
  • Show Jury Pay received on Line 21, Other Income
  • Enter amount turned over to employer on Line 35

NTTC Training – 2013

quality review adjustments
Quality Review – Adjustments
  • Does 1040 page 1 reflect Adjustments properly
  • Compare with Intake/Interview Sheet
  • Compare with last year’s return
  • Were other forms generated that should be addressed

NTTC Training – 2013

adjustments to income2
Adjustments to Income

Questions?

Comments…

NTTC Training – 2013

let s practice in taxwise
Let’s Practice In TaxWise
  • Open return for Kent in TaxWise
  • From Pub 4491W page 67, enter adjustments
  • Verify tax liability

NTTC Training – 2013

ad