How to file -- 10%

Filing status

- head of household: UNMARRIED (spouse didn't live with for 6+months), over half household expenses and more than half support qualifying child or relative (lived there over half of year) that CAN be claimed

- MFS: CANNOT claim tuition expenses, standard deduction (MUST itemize), Child Dependent Credit, earned income credit, adoption credit or educational credits (American and lifetime). IRA deduction starts phasing at 10K income.

- MFJ: can deduct IRA contributions for non-working spouse, tax years must start on same date, if one is non-resident they both pay world-wide taxes

- Qualifying Widow(er): MUST have dependent child, if married deceased is now mfs.



- Qualifying child:

1. Relationship

2. Age: Under 19 (24 if fulltime student)

3. Residency: lived with for over half the year (illness, vacation, military,) non custodial parent can take the dependent if agreed in writing.

4. Support: doesn't work only if child covered over half THEIR OWN, doesn't matter who did

- Dependents file if income is over $1,100 if income $750 or less, if over $750 but under $12,200, standard deduction is $350 added to income. If made more than $12,200, standard deduction is $12,200



Qualifying Relative: Gross income less than $4,200, lived with the WHOLE year, related (even step/in-law, NOT foster), over half support



Filing requirements

MUST file if

- self employed earned over $400 ($108.28 Church)



Income -- 11.5%

Earned income:


Tips: Unreported tips are on 4137, $21+ must be reported monthly to employer (4070), non cash tips don't have to be reported, IRS assumes 8% of total sales.


Interest: Schedule B, Net Investment Income Tax (NIIT) 3.8% tax on investment gain if MAGI (AGI with foreign earned income and deduction added back) over $200k S/HOH, $250k mfj



Ordinary (non qualified): corporate distributions of profit in the form of CASH. Taxed as income

Qualified: taxed at capital gains 20%, 15%, or 0% depending on bracket. (1b of 1099-DIV). Must have been held more than 60 days before the 121-day period that starts 60 days before the ex-dividend date.

Preferred stock: 90 days during 181-day period that begins 90 days before ex dividend date (over 366 days total).

– Qualified: 60 -121-60 ex-dividend (366+ days) || Preferred: 90-181-90 exdividend (under 367 days) –

- If dividend income is OVER $1,500 it must be reported on schedule B part 2

- if MAGI is over $200kS/$250Kmfj, taxed at Net Investment Income (NIIT), 3.8%




Business, farm: 2/3s or more and pay less in estimated taxes,

- farming debt cancelation doesn't count as income,

- AMT allows for farming deductions, Schedule F,

- Commodity Credit Corporation - farm loans

- A loan is considered income for farmers. Any crop sale over the loan amount is additional income. Any crop used to feed livestock is an expense.

- Expenses for farmers are on Part II of Schedule F

- They can deduct 75% of a vehicle without records

- If using cash method, they can deduct supplies purchased up to 50% of all expenses that year

- "Farm-related" someone who lives on a farm and is involved or is related to someone involved

- equipment and buildings are deductible, if rented it's treated like a loan where only the interest and depreciation is deductible.

      1. - soil and water expense deduction is limited to 25% of gross income and can be carried into the future (doesn't say how many years)

      2. - Only farm corporations can deduct their own paid hours as labor, not llcs, soles, etc.

      3. - Land is not depreciable. Livestock, equipment is. Home is considered personal property. 

      4. - Basis for a gift is what the donor's basis was.

      5. - Depreciation begins when the property is 'ready and available.' A hay bale is right when received but a fruit tree isn't 'ready' until it fruits for the first time, livestock is when they are first bred.


Schedule C: necessary for biz income/losses,

- If short-term rental with services to renters then should be reported using schedule C (schedule E for long-term minimal services).

- Used for royalties ONLY if self-employed (if not schedule 3)

- Canceled debt from a business is reported on Schedule C as biz income (unless farmer)

- ATM allows for deductions on schedule C



- Additional income (alimony, business income, [NOT Capital Gains now]) on Schedule 1

- Sick pay counts as normal income

- Income from interstate vehicle job is totally exempt, alimony, employer payments for commute, child support, worker's comp, welfare, veteran's benefits, no-fault disability payments, employer contribution to IRA, ALL are NOT taxed nor used as deduction.

- payments from no-fault disability are NOT income (not taxable)

- employers contribution to IRA, etc is NOT income

- elective deferral is NOT income up to $19k

- Volunteers In Service to America taxed as INCOME.

- Peacecore everything outside of main pay is taxed (family payouts,leave allowances and readjustment allowances)

- Clergy not income if church recieves it or if clergy gives it to church. If church pays rent/utilities NOT income (reasonably), unless clergy is self-employed

- Ordinary dividends taxed as income (if given as stock then reported but not taxed), Qualified dividends taxed as Capital gains

- Roll-over not income if within 60 days (20% if over 60 days)

- Unemployment if from government program where contributions were made, not taxed until amount contributed is met. If from previous employer, counts as WAGES


Fringe Benefits



Pensions & annuities:

- A basic pension is taxed on the way out (distro) because not taxed on way in (contri) like Roth

- Lump sum is taxed at 20% unless to be rolled over

- non-periodic distributions have a flat rate of 10%

- if W4-P isn't filled out, taxpayer treated as mfj claiming three withholding allowances


- Annuity isn't provided by employer (pensions are) and is only partially taxed on distribution (pensions are fully taxed on way out)


- Disability Pensions are reported as income till retirement age

if Military/governemnt disability pension EXCLUDED if injury from services

Retroactive Department of Veteran Affairs (VA) if found to have disability, 1040x ammend all year prior

Terrorist attack or millitary action: disability payments not taxed

– so, if injured in service, not taxed. If just disability pension, taxed till retirement –



- W-4V is for social security payments and tier one railroad retirements

- 1099-R is for withdrawals from retirement accounts, sent from custodian

- You CANNOT do an elective deferral for contributions to a roth IRA

- Qualified retirement plan: when your employer matches contributions, limit of $56k a year

- Early distributions are before age 59.5 || Required Minimums start at 70.5 (April 1st)

*No required minimum for Roth IRA




Rentals Income: Schedule E (unless short-term)

- Considered rental if used lesser of 14 days or 10% of time you rent it out

- If short-term then Schedule C

- limits if you're deducting rental expenses from non-passive income: $25k S or MFJ (phases at MAGI from $100k-$150k) and $12,500 MFS (phases at MAGI of $50k-$75k). Can be carried into future indefinitely.

- Constructive reciept: not subject to limitations and restrictions so taxes are to be paid

- Advanced rent is reported the year received

- Security deposits NOT taxed because owner intends on giving it back

- Renter fixes something both income and deducted (as expense if deductible)

- Maintenance counts as an expense.

*Expenses maintaining passive can't go against non-passive income.

- MAGI adds back rental losses from adjusted gross income

- Taxpayer using rental as home can't use expenses to offset anything other than rental income

- TCJA made it so rental owners can take Section 179 deduction of furniture up to $1,020,000, as well as personal property used for biz, even used less than 50% of the time (including computers). Also includes new roofs, security systems, heating, etc.

- Schedule E is included in ATM



- Ends if the property is no longer used to generate income or the entire cost basis has been deducted

Section 179: $1,020,000 limit, does NOT generate loss, new and used, subject to recapture if property is used under 50% for business. If over this limit, the deduction amount is reduced by how much over it is, thereby creating a new limit. TCJA made it so that land lords and hotels can use this for furniture and personal property used less than 50% for business.

- Royalties can be offset by depreciation.

- Tax Basis what's left after depreciation, improvements, etc that you actually get taxed on.

- Accumulated Depreciation is subtracted from cost basis to arrive at tax basis

- MACRS ADS usually a longer period than straight line (more depreciation)

- home office includes NO DEPRECIATION

- Farm buildings and equipment are depreciable only if they are owned, if rented, int is deducted.

- 'ready and available' – farm animals are after first birth, trees are after first harvest.

- Residential Real Estate Depreciation time period 27.5 years

Commercial Real Estate Depreciation time period 39 years

- STRAIGHT LINE DEPRECIATION: subtract 'salvage value' from cost basis then multiply that by number of years as a percentage (over 1, 5 years is 20%). intangibles is over 15 years


Modified Accelerated Cost Depreciation System MACRS – after 1987*


ADS- Alternative Depreciation System:used for anything tangible outside the US, 50% or less in business.

HALF YEAR CONVENTION is required, half the first years depreciation UNLESS they acquired the property in the last three months (1.5 months deprecation in this case).

MID-MONTH CONVENTION for real estate, railroad grading or tunnel bore. Half month of depreciation when property was put into place and half a month after it was removed.

MID-QUARTER only triggered if 40% of personal (non-rela estate) assets were placed into service in any (one) quarter of the year.

Bonus depreciation (special depreciation allowance): for ONLY NEW to taxpayer tangibles and computer software before 1/1/20, not subject to recapture, 100% deduction of basis in one year either

Before 179 or

after MACRS and the rest is straight line

No real property* but improvements count.



Listed property: used for business by employees. Cars only under 6k and must be used over 50% based on mileage.

Form4797 sale of depreciated biz property. The recapture rate is at capital gains. 1031 is the only way out of this.



Social Security Income: (provisional income = half of ss income + everything else [GROSS])

- SS = 6.2% x2 || Medicare is 1.45% x2

at $200k S/$250k mfj, medicare goes up an additional 0.9%

- Distribution taxes: if making this much gross (PROVISIONAL) - you'll be taxed this much.

S – Below $25k – 0 || $25k-$34k – 50% || Over $34k – 85%

mfj – below $32k – 0 || $32k-44k – 50% || over $44k – 85%

mfs – 85%



- W-4V is for ss payments and railroad retirements.

- Combat pay is not charged income tax but IS charged SS and Medicare taxes.

- Social Security benefits are NOT included in estate

- The ss payments an employer makes are deductible (along with all other payments to employees)



- 1031 Exchanges only work on investment properties, not primary res

- Capital Asset anything used for investment, personal use, pleasure, stocks/bonds, household furnishings, car (for pleasure commutes) collections, jewlery, valuable metals, etc.



Other income

- Royalties on Schedule 3 UNLESS self-employed (then on Schedule C)

-IRD (income in respect of decedent) taxed as income as well as estate tax is charged (deductions made year of death

- Income Replacement Insurance payouts count as income



Assets – 8.5%


Capital assets: anything used for investment, personal use, pleasure, stocks/bonds, household furnishings, car (for pleasure commutes) collections, jewlery, valuable metals, etc. Often depreciable. Something expensive (including furniture) you'd buy and keep for a while.



Basis Sale of capital assets



Sale of Stock:

Preferred stock: 90 days during 181-day period that begins 90 days before ex dividend date (over 366 days total).



Personal residence




Adjustments -- 5%

IRA, SEP, Keogh, simple:

IRA: 10% tax on non-periodic withdrawals

Investments within the IRA are taxed when made but doesn't affect taxes upon distri

Excess Contribution: smaller of taxable income and the limit (19k?), penalty 6% of excess & int


SEP: Simplified Employee Pension, Most flexible least paperwork

- Allows for ONLY EMPLOYER contribution of 25% of employees compensation, max of $52k

(20% of self employed income after deductions, expenses and self employment tax ).

- Doesn't show up as income for employee, deduction as wages for employer but if you're self employed, it's the same as IRA (just deduct contributions).


Keogh: No scorps, aka annuity

- calculating taxes under age 75 ('Simplified Rule'): total contribution/number of anticipated monthly payments (based on age of person) = nontaxable monthly portion. Multiply by twelve and subtract from number received and you have your tax-free amount.

There's also a 'General Rule' for those over 75.




- after 12/2018, no longer deduction or income

- Reported on Schedule 1

- qualified Domestic Relations Order: court order to pay alimony or other marital charges



Married Filing Separately: Can't claim tuition expenses or student loan deduction, must itemize, Elective deferrals phases out at MAGI of 10k, can't claim contributions to spouses IRA, no child dependent credit, EIC, adoption credit or education credit.


Student Loan Interest: (actually adjustment) Deduction is maxed at $2,500, phases ($70k-$85k/$140k-..), student can work under conditions for cancelation of student loan or death/disability. Can be taken with standard deduction (above the line). Not if MFS. 1098-E


Tuition and fees: 8917. MaGI under $65k. $4k max. DOES NOT include Room and board


Self-employed health-

- self employed can take as deduction from biz income without meeting 7.5% of AGI limit


Self-employment tax:

- stock traders DO NOT pay this, they report gains/losses on 8949 and schedule D

- Basically SS and medicare taxes that would be paid with employer (SS- 6.2%x2| medicare- 1.45% x2)

- Required at $400 income or more


Penalty on early withdrawal Itemized deductions -- 10%



- Medical and dental expenses over 7.5 of AGI can be written off ( No 7.5 floor if self employed). Long-term care and nursing care are deductible mostly. NOT cosmetic surgery if voluntary, elective surgery


Max for spousal IRA – lesser of $6k (7k if over 50) or total incomes reduces by a few things (pg 121)



- Collectables – 28%

- Alternative Minimum Tax: if over, difference is added to tax liability. Only allows for deductions from Schedule E, F and C, NOT schedule A. EXEMPTIONS: $71,700 S|$111,700 MFJ|$42,250 MFS

- NIIT: Net Investment Income Tax, 3.8% on gains if MAGi is over $200k S HOH|$250k mfj w

- Kiddy: if child makes over $2,200/m or gross over $1,100/m unearned they're taxed at parents bracket. Must be under 19 or 19-23 in school fulltime form 8814

- FICA: SS and Medicae an employer withholds (6.2% and 1.45%). If overcollected, line 11 schedule 3 but tax payer might not get it back.

- FUTA: federal Unemployment tax, all employers pay this.

- Self Employment tax: ss 12.4% and medicare 2.9%

- Payroll: deposits of withheld ss and medicare semi-weekly or monthly Pub 51

- Estate tax exemption is at 11.4M/22.8M. Based on where decedent lived at death. Highest is 40%. Beneficiary gets a deduction first year because of increased income – aka unified credit


Interest: Schedule D. 1099-DIV or 1099-INT. 1040 Line 2.

1099-INT Box 1: all interest income including renewable energy credits, bonds, etc

1099-INT Box 3: interest income from US savings bonds, treasury bills, treasury notes/bonds

- Original Issue Discount Interest income that occurs from the maturity of a bond. If OIG divided by the number of years is less than .25% of redeemed price, no taxes owed.

- US Savings bonds; Series EE (most, doubles in 20 years), Series HH (20 years, paid out twice a year), Series I (30 years, interest based on inflation)

- Seller carried mortgage: Schedule B




Credits -- 10%

Child care

- Health care: Premium tax credit vs HCTC:

- HCTC: don't qualify if your healthcare is from market place (premium tax credit instead). Covers 72.5% of health care coverage.

- Premium Tax Credit:

- Deducting medical expenses: schedule A, only the part that exceeds 7.5% of AGI

- Elderly, disabledOver 65 or received disability paymetns

- Earned income Credit: Investment income must be under $3,600,must have qualifying child (under 19, 24 if fulltime or disabled), Social Security Number required, No mfs, child can't file mfj unless only for return, no foreign earned income,

- Education above

- Child Tax Credit: $2,000 per child, $1,400 is REFUNDABLE. Must live with for over HALF year Can be claimed in addition to the child and dependent care expenses - $200,000 S,HOH,W,mfs/$400,000 mfj. If no SS, with ITIN only gets $500.

- Child and dependent care credit: use W-10 to collect info from provider (name and address), based on income of the expenses incurred, limit of $3k per dependent, up to two


Child tax:

- 'Kiddie tax' is charged at parents bracket if kid makes over $2,200 unearned income

- must be under 18 OR 18 at end of tax year with earned income half or less than living expenses OR 19-23 in school fulltime earned income half or less than living expenses.

- Form 8814 if parents pay, Form 8615 if kid pays


Adoption: under 18 or handicapped, carries forward 5 years. Exclusion can be claimed as well but is claimed before the credit. Child must have ATIN Included in CAFETERIA PLAN

Other credits


Other Taxes – 2.5%

Averaging/lump sum

Tax computation

IRAs and other retirement plans:

- phase at MAGI of 10k

- Early distribution is taxed at income plus additional 10% (under 59.5)

- Required minimum distribution: must start April 1st of year after turning 72 (or 70.5 if turning 70.5 before 1/1/20) 50% tax if no distribution taken by then.

- Gift tax $15k exemption, not taxed if for education, campaigne donation, directly to care providers for medical care. If spouse, $155k excluded (unless future int in property). If from foreign person, must be reported if over $16,388


Other Payments -- 2.5%

Estimated Excess FICA:

Federal Insurance Contributions Act, is a withholding that employers and employees split (withhold) for medicare [1.45x2] and SS [6.2x2] (some other stuff too) if all employees get paid more than $2,500 OR one employee makes more than $150. There's a limit on it, if you go over you can claim is as a credt (sch 3, line 11).



- Accuracy- 20% underpayment, 40% if related to not disclosing (foreign account, etc)

- Failure to file: 5% per month up to 25% of tax not paid

- Failure to pay: .5% of unpaifd taxes per month (prorated). .25% if installment agreement is in place and they filed

- 'Substantial understatement' if over 10% of correct tax or over $5k

- Erroneous Claim: 20% of DISALLOWED AMOUNT

- Frivolous Return: $5k

- Fraud: 75% of underpayment




Other Federal and State Mini Problems – 12%




-Fiscal = non-calendar year, accrual method

-actual vs simple vehicle expense method pg 146

-Simplified deduction for home office: $5 a sqft up to $1,500.For daycare, divid the product of sqft by the number of hours they use the room

- abandoned spouse files as HOH

- limit on employer provide education assistance--- $5,250

- No limit on investment expenses and can be carried over to next year

- Below the line – itemized deduction on sch A || above the line: schedule 1 adjustment

- Trusts are NOT required to make estimated tax payments


- 60 days to find CE hours because they weren't legit

- keep CE proof for 4 YEARS

- if not renewed within 15 days after renewal date – Lapse (just pay and you're back)

- Not more than $5k for civil penalties




Schedule 1: additional income (SE, Alimony, biz,Sch E stuff, Farm, Unemployment, etc..) & Deductions (HSA, IRA, Student loan interest, tuition, etc..)

Schedule 2: Additional Taxes Self Employment tax (w schedule SE), Alternative minimum tax (w 6251), household income (w schedule H)

Schedule 3: Credits

Schedule A: Itemized Deductions. Either state INCOME tax or state SALES tax

schedule B: Interest Income(if over $1,500) Part 1: Education Savings Bond Program, sellr carried mortgage interest, int as nominee or from frozen deposits, etc (Part II Ordinary Dividends, Part III offshore accounts)

Schedule C: company/business income.- short-term rental with services, schedule C (schedule E for long-term minimal services). Royalties ONLY if self-employed (if not schedule 3). Canceled debt from a business is reported on Schedule C as biz income (unless farmer). ATM allows for deductions on schedule C

Schedule D: usually hand in hand with form 8949 (Sale of Capital Assets)

Schedule E: Loss/income from royalties, rentals, partnerships, S corps, estates, REMICs, etc


Form 709: receiving a gift or giving gift over limit ($15k), one per person

Form 706: deadline 9 months after death, gen skipping transfer gift

Form 982: Canceled debt

Form 1098: mortgage insurance

Form 1116: Foreign Tax Credit

Form 2210: Underpayment of estimated tax

Form 2120: Multiple support agreement

Form 2441: Child and dependent care expenses

Form 3115: accounting method change or depreciation method change

Form 4972: Lump sum distributions

Form 4562: Depreciation

Form 4506: request copy of tax return

Form 4868: 6 month extension

Form 4070: monthly tips report to employer

Form 4137: Unreported tips - 'other income'

Form 4797: sale of depreciated business property

Form 4868: for 6 month extension

Form 5329: Taxes on Early distributions

Form 6252: Gains off asset disposition

Form 6251: AMT

From 8300: cash payments over 10k

Form 8606: non deductible contributions

Form 8812: actc

Form 8814: Claiming a child's income

Form 8615: Tax for children with Unearned income

Form 8818: redemption of US savings bonds

Form 8829: business use of home

Form 8815: Education Savings Bond Program

Form 8857: innocent spouse relief

Form 8379: Injured spouse allocation

Form 8594: Acquisition of assets (ie a business)

Form 8949: Sale or exchange of capital assets

Form 8824: 1031 exchanges

Form 8283: non cash charitable contributions

Form 8582: Losses on passive income

Form 8919: employee taxes weren't withheld

Form 8863: American Opportunity Credit

Form 8396: Mortgage interest credit

Form 8962: Premium Tax Credit

Form 8888: refund in several accounts

Form 9465: Installment agreements (don't if can be paid in 4 months)



W-4V: Social Security Payments

W-10: Care provider info(child or dependent care credit)

*Memorize W2 including codes (D for sure)




*Below the line mostly refers to adjustments made on schedule A vs credits. If you aren't itemizing there is no Schedule A so there's no 'below the line'. If you're not itemizing AND you're not taking any credits, there's no below the line or above the line.



Quiz Notes

- Some REFUNDABLE credits are on 1040 (earned income credit, American Opportunity credit, additional child tax credit and child tax credit) the rest are on schedule 3.

- Watch out for when they say 'a month' vs 'a year' !!



- Income from interstate vehicle job is totally exempt






Widower must file MFJ year that spouse dies
Just schedule 6 has been eliminated?

Do the penalties

form 8283


-15 day rule for rentals-

-Educator expense rules

-Alimony and child support are taxable? Are income then deducted? NO. They're not income or deduction.

- Child tax credit, entire year or over half? Over half if child, doesn't need to be claimed as depndent

- Cjild care procider identification

- Student interest loan deduction includes room and board?

- 60% limint of donations – of AGI, taxable income or?? AGIIII

What deductions are removed when paying AMT – medical/dental expenses, passive activities income/losses, tax refunds, SALT, foreign



- Moving expenses -

Itemized expenses under tcja

- Child & Dependent Care Credit: this is to cover a portion of the cost of taking care of someone in order to work or look for work so it's 20-35% percentage (based on income of the expenses incurred, limit of $3k per dependent, up to two

- Max for spousal IRA – lesser of $6k (7k if over 50) or total incomes reduces by a few things (pg 121)

- Form 1098 – mortgage insurance

- education credits, how american opportunit;y works

form 4868 extension

- if you don't use a calendar year (jan thru dec) then you're using a fiscal year

- rules around INVENTORY and accounting methods

- actual vs simple vehicle expense method

- Home office business use details- Simplified deduction for home office: $5 a sqft up to $1,500. Along with other deductions on Schedule A (mortgage int, taxes, etc). No depreciation included. For daycare, divid the product of sqft by the number of hours they use the room. 

- daycare as it relates to home business use


8814 and sorm 8615

Understatement 10% or 5000

- Abandoned spouse files as hoh

- wtf is meant by exemption?

W-4 doesn't use allowances anymore and has worksheet for MFJ

form 4137 is 'other income'


-Worker's comp is NOT taxed

- limit on employer provide education assistance--- $5,250

- Employer can no longer DEDUCT transportation they cover for employees

Is child support taxed? No

Welfare isn't taxed

- Accountable plan makes reimburesements to employees tax free – not in income

- is there a limit to investment interest expenses such as the total net investment income? Can it be carried over?There is no limit and it can be carried over to next year

- Gains from transferred property from a divorce are TAX FREE

What's ad valorem? According to value



The maximum taxable earnings for Social Security withholding is inflation adjusted


adoption credit can be carried over 5 years and increases with twins, etc.


Adoption benefits are included in cafeteria plan


you have to itemize to take 'below the line' deductions. If they are taking a deduction from schedule 1, it's considered an adjustment and everything on schedule 1 is above the line. Charitable donations are itemized, not on schedule 1.


Why is there an anully adjusted max for ss collections? Why not just keep that money comin?








- Trusts are NOT required to make estimated tax payments

The child tax credit has been expanded to $2,000 per qualifying child and is refundable up to $1,400, subject to phaseouts. The bill also includes a temporary $500 nonrefundable credit for other qualifying dependents.


- Do dependents raise your income threshold that determines if you have to file in Oregon?


Oregon DOJ disqualifies charitable organizations if they don't use at least 30% of their annual functional expenses


Form 4972


Highlight lumpsum distributions – if you chose the 20% capital gain than you will add the entire lump sum to oregon income



- 60 days to find CE hours because they weren't legit

- keep CE proof for 4 YEARS

- if not renewed within 15 days after renewal date – Lapse (just pay and you're back)

- Not more than $5k for civil penalties