Exclusion available for interest from us series ee

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Exclusion: Available for interest from U.S. Series EE BondRequires that the redemption proceeds be used to pay for higher education expense ofthe taxpayer, the taxpayer’s spouse, or dependent of the taxpayerQualified Expenses:Tuition and fees required for enrollment or attendance at an eligibleeducation institution.Taxpayers may also exclude the interest income if they contributethe proceeds to a qualified tuition program.Exclusion is partially reduced or eliminated for taxpayers exceeding a fixed levelof modified adjusted gross income. IIf the taxpayer’s modified AGI exceeds the threshold in the redemption year, theexclusion is phased out.Exclusions that Mitigate Double TaxationCongress provides certain exclusions that eliminate the potential double tax thatmay arise for gifts, inheritances, and life insurance proceeds.Gifts and InheritancesIndividuals may transfer property to other taxpayers without receiving or expecting toreceive value in return.GiftIf the transferor is alive at the time of transfer, the property transfer is called a gift.Subject to federal gift taxInheritanceIf the transferor is deceased, the property transfer is called an inheritanceThese transfers are usually subject to federal estate taxGift and estate taxes are imposed ontransferof the property andnot included in income bythe recipient.The exclusion of gifts and inheritances from income taxation avoids thepotential double taxation (transfer and income taxation) on these transfers._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Chapter 5 Notes: Gross Income and ExclusionsLife Insurance ProceedsWhen the owner of the life insurance policy dies, the beneficiary receives the death benefitproceeds. The decedent (or the decedent's estate) is generally subject to estate taxation onthe amount of the insurance proceeds. In order to avoid potential double taxation on thelife insurance proceeds, the tax laws allow taxpayers receiving life insurance proceeds toexclude the proceeds from gross incomeDiscussion of forms of income not discussed above (the simplified versions to know for exam):Form of income or gainIncome or gain realizedIncome or gain recognizedSalaries and wagesAll in the year of receiptAll in the year of receipt1FB2: The portion of employee’s medicaland dental health insurance coveragepremiums the employer paysAll in the year of receiptNone in any tax year(permanent exclusion)FB: Group term life insurance premiumsfor the employee paid by the employerAll in the year of receiptNone in any tax year(permanent exclusion)FB: Meals and lodging for theemployer’s convenience (required for theemployee to do work for the employer)that the employer coversAll in the year of receiptNone in any tax year(permanent exclusion)FB: Employee educational assistanceprograms covering tuition, books, andfees that may or may not be part of adegree seeking program.

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Taxation in the United States

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