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2010 CCH Comp Topics Ch05 - Chapter 5 Gross Income...

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Click to edit Master subtitle style CCH Federal Taxation Comprehensive Topics Chapter 5 Gross Income Exclusions ©2009 CCH. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com
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CCH Federal Taxation Comprehensive Topics 22 of 34 1. Social Security Benefits 2. Interest on U.S. Savings Bonds 3. EE Bonds Used for Education 4. Fringe Benefits 5. Group Life Insurance 6. Annuities 7. Compensation for Injuries and Sickness 8. Insurance Reimbursement Summary 9. Damage Awards Chapter 5, Exhibit Contents A Chapter 5 Exhibits
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CCH Federal Taxation Comprehensive Topics 33 of 34 10. Cafeteria Plans 11. Adoption Assistance 12. Employee Tuition Reduction Plans 13. Dependent Care Assistance Program Chapter 5, Exhibit Contents B Chapter 5 Exhibits
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CCH Federal Taxation Comprehensive Topics 44 of 34 Social Security Benefits n A portion of Social Security income is taxable to the extent that a taxpayer’s provisional income exceeds certain base amounts. n Provisional income equals adjusted gross income, plus one-half of Social Security received, plus some non- taxable items such as tax exempt interest. Chapter 5, Exhibit 1a
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CCH Federal Taxation Comprehensive Topics 55 of 34 Social Security Benefits 1st threshold base amounts - $25,000 for single - $32,000 for married filing jointly If a taxpayer’s provisional income exceeds the 1st threshold (but does not exceed the 2nd threshold), the taxable portion of Social Security is the lesser of: A. 50% of Social Security benefits or B. 50% of the excess of the taxpayer’s provisional income over the base. Chapter 5, Exhibit 1b
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CCH Federal Taxation Comprehensive Topics 66 of 34 Social Security Benefits 2nd threshold base amounts - $34,000 for single - $44,000 for married filing jointly If a taxpayer’s provisional income exceeds the 2nd threshold, the taxable portion of Social Security is the lesser of: A. 85% of Social Security benefits OR B. 85% of the amount that provisional income exceeds the threshold plus the smaller of (1) the amount of SS benefits included under the prior law or (2) $4,500 for unmarried taxpayers or $6,000 for married filing jointly. Chapter 5, Exhibit 1c
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CCH Federal Taxation Comprehensive Topics 77 of 34 Social Security Benefits Married taxpayers filing separately have no base amount and must include in gross income the lesser of A. 85% of Social Security benefits OR B. 85% of their provisional income Chapter 5, Exhibit 1d
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CCH Federal Taxation Comprehensive Topics 88 of 34 Interest on U.S. Savings Bonds n The general rule is that interest on U.S. savings bonds is fully taxable . n Cash basis taxpayers may report interest income on a yearly basis or defer the recognition of interest income until the bonds mature. Chapter 5, Exhibit 2
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CCH Federal Taxation Comprehensive Topics 99 of 34 EE Bonds Used for Education However, interest earned on U.S. savings bonds may be excluded if the proceeds are used to finance the higher education of the taxpayer, taxpayer’s spouse or dependents.
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