Katie Luaces
FIN355/WK 17 MAY 2022
CH. 1 ,3, 6, & 7
1.
Ch3Q3) Define gross income. Gross income includes all income that must be reported on federal tax returns and is subject to the federal income tax. This includes wages and salary, as well as other forms of income, such as pensions, interest, dividends, capital gains, business income, and rental income
2.
Ch3Q4) List some examples of items that would be included in gross income
.
Items that would be included in gross income are rental income, gains from the sales of assets, distributions from retirement plans, compensations (salaries, wages, etc.), interest income, royalty income, unemployment compensation benefits, and gross income from self-employment, interest income, and alimony received. However, for divorces completed after 31 December 2018 and divorces executed before 1 January 2019 that were modified with express instructions, the modification incorporated the amendments made by TCJA 2017; alimony received is not included in the recipient's gross income. 3.
Ch3Q19) What tests must a qualifying child meet?
Four tests will determine a qualifying child, and they must meet all four.
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A relationship test
: the qualifying child must be a taxpayer's child, a descendant of the taxpayer's child, the taxpayer's brother, sister, step-brother, step-sister, half-
brother, half-sister, or a descendant of the taxpayer's brother, sister, step-brother step-sister, half-brother, or half-sister. -
Adobe Test
: A qualifying child must live with the taxpayer for more than half of the year, even during temporary absences due to special circumstances such as illness, military, education, business, or vacation.
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Age Test
: The qualifying child must be under the age of 19 and younger than the taxpayer at the end of the calendar year or a student under 24 and younger than the taxpayer at the end of the calendar year. To be considered a student, the child must be full-time at an educational institution for at least five months during the calendar year. -
Support Test
: this is satisfied if a qualifying child does not provide more than 1/2
of their own support during the year. If the child is the taxpayer's child and is a full-time student, amounts received scholarships are not considered to be supported.
4.
Ch6Q7) Describe what does and does not qualify as a deductible moving expense.
Prior to tax years before 2018 and after 2025, moving expenses will be deductible. TCJA 2017 suspended the deduction for qualified moving expenses and the exclusion for
