Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Chapter 5, Problem 1MCQ
To determine
Concept Introduction:
Gross income is the starting point for calculating a taxpayer’s liability. It includes all the income from any sources unless there is an exception in the law. In gross income, non-cash items are included at the fair market value. These incomes are excluded from
To explain: The false statement about health saving account
Expert Solution & Answer
Answer to Problem 1MCQ
The answer is option “B”
Explanation of Solution
Under the health savings account, the contribution to HSAs is the deduction for AGI or limited to a certain amount depending on whether high deductible insurance covers an individual or family. Earnings and unused contributions accumulated in HASs are not taxed, and distributions to cover medical expenses are also not taxed. As per the law, contribution to HSAs must generally be made by April 15 of the year following the year for which the contribution is made. And distributions that are not used to pay for qualified medical expenses are subject to both income tax and a 20% penalty.
The out-of-pocket limit under the affordable care act is generally higher than the IRS limits determine tax compliance for HAS. Therefore, option B is false that HSAs are available to any taxpayer using a health plan purchased under the affordable care act.
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Students have asked these similar questions
Choose the response that accurately completes the following sentence. A taxpayer claiming the Premium Tax Credit:
May be claimed as a dependent on another person's return, as long as they are under age 27.
May have employer-sponsored health care coverage.
Will receive a refund if the amount of the credit is larger than the tax they owe.
Must have purchased private coverage through a plan outside the Marketplace.
In 2021, the shared responsibility payment:
Applies to uninsured taxpayers whose modified adjusted gross income exceeds the threshold amount for their age and filing status.
May reduce the amount of the Premium Tax Credit.
Applies only to nonresident aliens who received health insurance through the Marketplace.
Does not apply.
Which of the following are qualified medical expenses for purposes of itemized deductions?
a.Medical expenses paid personally out of a standard checking account.
b.Medical expenses that were reimbursed in the same year.
c.Medical expenses paid with funds out of a Health Savings account.
d.Health insurance premiums paid pre-tax through an employer's benefit plan.
Chapter 5 Solutions
Income Tax Fundamentals 2020
Ch. 5 - Prob. 1MCQCh. 5 - Prob. 2MCQCh. 5 - Prob. 3MCQCh. 5 - Which of the following is true about the...Ch. 5 - Lyndon, age24, has a nonworking spouse and earns...Ch. 5 - Prob. 6MCQCh. 5 - Prob. 7MCQCh. 5 - Prob. 8MCQCh. 5 - Prob. 9MCQCh. 5 - Prob. 10MCQ
Ch. 5 - Prob. 11MCQCh. 5 - Prob. 12MCQCh. 5 - Prob. 13MCQCh. 5 - Prob. 14MCQCh. 5 - Eliza is a kindergarten teacher for Alexander...Ch. 5 - Prob. 16MCQCh. 5 - Prob. 17MCQCh. 5 - Prob. 18MCQCh. 5 - Prob. 19MCQCh. 5 - Prob. 20MCQCh. 5 - Prob. 21MCQCh. 5 - Prob. 22MCQCh. 5 - Prob. 23MCQCh. 5 - Prob. 24MCQCh. 5 - Prob. 25MCQCh. 5 - Prob. 26MCQCh. 5 - Prob. 27MCQCh. 5 - Prob. 28MCQCh. 5 - Prob. 29MCQCh. 5 - Prob. 30MCQCh. 5 - Which of the following would typically be...Ch. 5 - Which of the following is not a possible...Ch. 5 - Prob. 33MCQCh. 5 - Prob. 34MCQCh. 5 - Evan participates in an HSA carrying family...Ch. 5 - Prob. 2PCh. 5 - Karen, 28 years old and a single taxpayer, has a...Ch. 5 - Phil and Linda are 25 -year-old newlyweds and file...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Bob is a single, 40 -year-old doctor earning...Ch. 5 - Prob. 9PCh. 5 - During 2019 , Jerry is a self-employed therapist,...Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Janet needs an elevator seat attached to her...Ch. 5 - Lyndon's employer withheld $10,100 in state income...Ch. 5 - Mike sells his home to Jane on April 2,2019 . Jane...Ch. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Ken paid the following amounts for interest during...Ch. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - At the end of 2019, Mark owes $250,000 on the...Ch. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - On January 3,2019, Carey discovers his diamond...Ch. 5 - Prob. 32PCh. 5 - Prob. 33P
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Similar questions
- Which of the following is not a requirement to receive the premium tax credit for health care? Health care through the employer is not available Health insurance is purchased through the state or federal exchange Income must be no greater than 200 percent of the federal poverty line The taxpayer cannot be claimed as a dependentarrow_forwardWhich of the following is true about the self-employed health insurance deduction? The deduction can be claimed when a subsidized employer health insurance plan is also available. The deduction can be claimed if the taxpayer has an overall business loss from self-employment. Long-term care premiums may not be deducted within specified dollar limitations based on age. The self-employed health insurance deduction is a for AGI deduction. Dental insurance is not included as deductible self-employed health insurance.arrow_forwardA self-employed taxpayer may be eligible to deduct amounts paid for medical insurance for themselves and for their families, as long as neither they nor their spouse were eligible for employer-sponsored health insurance. To claim this deduction, a qualifying taxpayer should:arrow_forward
- Beginning in 2019, are individual taxpayers required to maintain minimum essential health coverage (associated with the Affordable Care Act)? This was termed the individual shared responsibility tax.arrow_forwardWhich of the following taxpayers may qualify for the Premium Tax Credit? Each purchased health care coverage through the Healthcare Marketplace, and each received Form 1095-A, Health Insurance Marketplace Statement. None received unemployment income. Alanis. She files single and her tax liability is zero. Caleb. He and his spouse file married filing separately, but live in the same house. Jordan. He files head of household and was eligible for employer-sponsored coverage, but he chose not to enroll in the plan because it would have cost him 5% of his household income. Sydney. She files single and will be claimed as a dependent on her grandmother's return.arrow_forwardWhich of the following, when provided by an employer, is a tax-deferred or tax-free benefit for the employee? a. Premiums for private health care plans providing extended health coverage beyond a public plan b. Financial counselling services not connected to re-employment or retirement c. Group term life insurance policy d. A $200 cash gift for the employee's weddingarrow_forward
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