Chapter 10 Individuals - Chapter 10 Individuals Income...

Info icon This preview shows page 1. Sign up to view the full content.

Chapter 10 Individuals: Income, Deductions, and Credits Alimony, Child Support, and Property Settlements Alimony is o Deductible by payer o Includible in gross income of recipient Child support payments o Payments made to satisfy legal obligation to support child of taxpayer o Nondeductible by payer and not taxed to recipient (or child) Interspousal Property settlements o Transfer of property to former spouse o No deduction or recognized gain or loss for transferor o No gross income and carryover of transferor’s basis for transferee Prizes and Awards General rule: FMV of item is included in income Exceptions o Taxpayer designated qualified organization to receive prize or award o Employee achievement awards of tangible personal property made in recognition of length of service or safety achievement. Unemployment compensation is taxable in full Social Security Benefits o A portion of Social Security income is taxable to the extent that a taxpayer’s provisional income exceeds certain base amounts
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: o Provisional income equals adjusted gross income, plus one-half of Social Security received, plus some non-taxable items such as tax exempt interest. o 1 st Threshold base amounts - $25,000 if Single, and $32,000 for MFJ o If over threshold there are two options 50% of Social Security benefits or 50% of the excess of the taxpayer’s provisional income over the base o 2 nd Threshold base amounts - $34,000 if single, and $ 44,000 for MFJ o if over threshold there are two options 85% of Social Security benefits or 85% of the amount that provisional income exceeds the threshold plus $4,500 for unmarried taxpayers or $6,000 for MFJ Specific Exclusions Applicable to Individuals Certain items are specifically excluded from an individual’s income include; o Gifts and Inheritances, Scholarships, Certain damages, Workers’ Compensation, Interest on Educational Savings Bonds, Proceeds from life insurance Deductions...
View Full Document

  • Fall '14
  • fabioambrosio
  • Accounting, Taxation in the United States, social security benefits, provisional income

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern