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IRS Tax Code by Mind Map: IRS Tax Code
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IRS Tax Code

Individuals required to File


younger than 65

65 or older

Gross Income

Does not include SS

Includes Foreign Income

gain from the sale of a residence

Filing Status



Qualified Window(er)

Married filing Jointly

Married Filing Seperately

Is the individual a dependant?

include child's income on parent's return

under the age of 18, gross income (if any) was from dividends and interest, Less than $8500

Due Dates


Automatic six month extension (form 4868), ext. to file; not to pay

Automatic if serving in combat zone

Head of Household


Individual Income tax, Calendar year, W/O wages subject to US withholding, June 15th, April 15, Fiscal Year, 15th day of the fourth month after the end of the fiscal year

Dead Person, 15th day of 4th month of decedent's normal tax year

Estate Tax

Presonal Income Tax


Below the line, Standard, MFS, MFJ, HH, Single, Qualified Widoe, Itemized, Medical Expenses (limited to only amounts above 7.5% of AGI(, Only allowed on amounts that exceed 7.5% of AGI, not covered by insurance, taxpayer, spouse and dependants qualify, Dependant must have over half of support paid by tax payer, must fall within family relationship, Must be citizen of US, Canada or Mexico during portion of tax year, does not need to satisfy the gross income or the joint return test, Children of divorced parents are treated as dependant of both parents, Quailfying expenses, Eyeglasses used for medical purposes, Professional Services, physicians, surgeons, dentists, chiropractors, Osteopaths, Chiropodists, Podiatrists, psychiatrists, psychologists, Medical Insurance, Premiums paid on policy that reimburse medical care are deductible, New node, either when the treatments occurred or when the payment is made, if using a credit card not when the credit card bill is paid (but when the credit card pays the bill), Smoking cessations (including prescribed drugs to alleviate nicotine withdrawel, Qualified long term care premiums and services, Health club or weightless clinic only if prescribed by a physician who provides a written statement that they are necessary to alleviate physical or mental defect or illness, Hospital Care, if and only if, New node, institution other than hospital if and only if institution (school for handicapped, rest home, etc..) is required for the need for and availability of medical care. If this is the case, meals, lodging and other services are deductible, Prescribed medicine and drugs, Capital Expenditures such as, wheelchair, seeing eye dog, artificial limbs, etc..., special beds, air-conditioning, dehumidifying, New constructions or permanent improvements to existing structures, excess cost of permant improvemant over the increase in value of the property, Widening of doorways, elevators, lowering of cabinents, Cost of operating asset when used primarily for medical care, Travel, essential and primarily for medical care are deductible, vacations are not deductible, can choose between, actual expenses (air fare, taxi, etc), milage at $.18 per mile, plus tolls and parking, lodging, $50 per night deductible, Medicare B, Qualifying expenses paid up to one year after taxpayers death, Alternately the estate could claim these expenses in lieu of the taxpayer, medical expenses for child before placement in adoptive parnets home, the child needs to qualify as a dependent of the adopting parent at the time the expenses are incurred or the fees paid, payment is not merely a reimbursment to the adoption agency or other persons, the adopting parent can clearly substanciate that the deduction is directly attributable to the medical care of the child, expenses types, Diagnosis, cure, mitigation, treatment, prevention of disease, purpose of affecting any structure of function of the body, transporation primarily for and essential to medical care, Non-Qualifying expenses, activity or treatment designed to improve health or wellness (even if recommended by a physician), health club, weight loss institute, When Taveling for health reason's meals are not deductible, Insurance premiums paid on a policy that merely pays the insured a specified amount per week, Medicare A, Casualty Losses, Limited Amount of loss to non-business propery that arises from theft, fire, storm, shipwreck, etc., Limitation, amount of loss over $100, amount of all losses (taking into acount only amounts over $100) over 10% of AGI qualifies, If the loss was covered by insurance, a claim must be filed, deductibles are not covered by this rule, The amount a less is the lesser of, decrease in FMV of the propery, or the property's adjusted bases minus and insurance reimbursments, Regardless of the 10% of AGI threshold, losses are deductible against casualty gains, casualty losses can be treated as capital gains/losses if the net amount of all personal casualty losses and gains after applying the $100 limit (but before the 10%-of-AGI threshold) is positive., Cost of appraising a casualty loss (a cost to determine tax liability) is a miscellaneous itemized deduction subject to the 2% of AGI threshold), Cost of insuring a personal asset is a nondeductible personal expense, Presidentially declared disaster area, disaster loss treatment is available when a personal residence is rendered unsafe, The taxpayer can deduct the loss on, the return for the year in which the loss occured, Ammending the previous year's return, limited by preceding years AGI, The loss is calculated on Form 4684 then carried over to schedule A, Charitable Deductions, must be made to qualified organizations, either public charities, derives more than 1/3 of its support from members and general public, private foundations, Corporations, trusts, community chests, funds, foundations, organized in the US, operated exclusively for, religious, charitable, scientific, literary, educational, prevention of cruelty to, animals, children, posts or organizations of war veterans, Domestic or fraternal societies, receipt, $250 or more, no deduction allowed without a receipt (canceled check is insufficient), must state the amount of cash or, describe the property, provide a good faith estimate of the value of the goods or services given, Less than $250, canceled check is sufficient receipt, seperate contributions are not combined, acknowledgment must be received by the earlier of:, by the date you file your return, the due date for your return, Property, deduction, the value of property is established in different ways. depending on the type of property, Form, Cash, capital gain property, limitation, depending on the type of property and the organization to whom it is given, a taxpayer is limited to the amount of AGI that might be deducted, 50% limit organizations, the majority of qualified organizations, non 50% organizations, mostly limited to 30% of AGI, however, if the doner elects not to reduce FMV by the amount of long term capital gain, donations that exceed the limitations can be deducted on the next 5 future returns, Servcies, the value of services are not deductible, reimbursed expenses incurred while rendering the service are deductible, uniforms, equipment, etc, Travel Expenses are deductible, no significant element of personal pleasure, recreation or vacation exists, milage rate of $.14/miles, plus parking or tolls, actuall expenses, depreciation and insurance are not deductible, Tickets, value of a ticket to a charitable event is deductible to the extent the purchase price exceeds the fair market value of the admission or privilege associated with the event, Allowed in the year the contribution is paid, Taxes, Real Estate tax, State, Local, Foreign, In the paid or accrued, Taxes paid to financial institution's and held in escrow are deductible in the year the finacial institution pays the tax to the taxing body, Services charges (if the funds are paid into a general revenue fund), police, fire, Special Assessments for local improvements are not deductible, Personal Property taxes, in proportion to the value of the property (a flat fee doesn't qualify, Imposed on an annual basis, actually imposed, Income Taxes, State Income taxes are deductible, Or State and Local Sales Tax (table amounts), Sales Tax on Vehicles and Boats in addition to the table amounts, Foreign income taxes paid (unless the foreign tax credit is claimed, Not deductible Taxes, federal taxes on, income, estates, gifts, inheritances, legacies, successions, State Taxes on, cigarettes and tobacco, alcoholic beverages, gasoline, registration, estates, gifts, inheritances, legacies, successions, Licensing Fess of Highway motor vehicles (if based on weight instead of the value of the vehicle), Sales taxes on Business property, this is added to the basis of the acquired property, estates tax return for income taxes paid on account of the decedent, Second-Tier Miscellaneous Items (amount that exceeds 2% of AGI), Only allowed on amounts that exceed 2% of AGI, disallowed amounts are not carried over to other tax years, Cost of appraising a casualty loss (a cost to determine tax liability) is a miscellaneous itemized deduction subject to the 2% of AGI threshold), Investment expense, Safety deposit rental fees, subscriptions to investment journals, investment counsel fees, Legal fees, related to collection of alimony payments, tax determination expense, return prep, manuals, legal and accounting advice, pre-printed tax forms, Not time in preparing one' own return, Representation in proceedings with the IRS, Accountant and attorney fees to obtain letter rulings, Appraisal fees relating to the resolution of tax issues, contesting the tax liability of another (if the tax liability is also personal to the tax payer), education expenses, deductible only if required to maintain/improve skills in taxpayers current employment context, correspondence courses, travel, supplies, supplies, books, research, typing expenses, tuition, not deductible, travel, as form of education (the travel itself is the educational purpose), not deductible, new trade/business/profession, personal and inseperable aggregate of personal expense, tax-exempt income, may not deduct portion of expenses that emanate from, Employee Expenditures, Employee travel away from home, must be away overnight, travel expenses, commuting is not deductible, lodging, meals, only 50% of meals are deductible, airfare, Automobile, car expenses, taxi fare, tolls, parking fees, can choose, mileage at std rate, plus, parking, tolls, actual expenses, purpose of trip must be connected with taxpayer's business, not away overnight, transportation expenses, airfare, Automoble, tolls, car expenses, taxi fare, parking, can choose, std mileage rate, plus, parking, tolls, actual expenses, outside Salesperson expenses, entertainment expense, only 50% are deductible, must be directly related to or associated with taxplayer's employment, home office expense, accountable plan, No, Not reimbursed by employer, can deduct, reimbursed by employer, employee can deduct, reimbursements are included in W-2, if yes, employee cannot deduct, must have paid or incurred expenses while performing service as employee, must account for expenses within reasonable period of time, must return excess reimbursement with reasonable about of time, uniforms (provided that they are not usable away from work, union dues, professional dues and memberships, subscription to business journals, job seeking expenses, Hobby losses, a hobby is an activity for which profit is not the primary motive, sometimes hobbies do produce income, if an activity produces profits in 3 of 5 consecutive years, it is not a hobby, 2 of 7 consecutive years if horse related, expenses can be deducted, only to extent of income, expense must be deducted in proper oder, 1) taxes, interest, 2) Expenses that do not reduce the tax basis of any hobby assets (utilites), 3) Expenses that reduce the basis of the hobby's assets (depreciation), expenses cannot be carried to other years, What does this mean: "the amount of expenses that do not exceed the hobby's gross income are deductions from AGI", Interest Expense, no personal interest may be deducted, credit card debt, revolving charge accounts, lines of credit, car loans, medical fees, premiums, underpaid tax liabilities, investment interest, may be deducted for, trade or business debt, investment interest expense, allocatable to portfolio income under the PAL rules, derived from an activity involving a trde or business in which, the taxpayer does not materially participate, and is not treated as a passive activity under the PAL rules, amount in connection with personal property used in a short sales, may not be deducted for, passive activity interest, this is includable with passive activities and deductible within the passive loss rules, qualifed residence interest, rental real estate activities in which the taxpayer actively participates, may be limited to the extent of net investment income, investment income is, nontrade or non business income from, intrest, dividends, rents, royalties, other gross income from property held for investment, Net gain on the disposition of property held for investment, a taxpayer may elect to treat all or a portion of long-term capital gains and qualified dividends as investment income, Income treated as gross portfolio income under PAL rules, Income from interests in trade or business in which the taxpayer does not materially participate, if the activity is not treated as a passive activity under the PAL rules, any excess of the net income from investment activity can be carried forward indefinitely, Qualified residence interest, no more that $1 million of acquisition indebtedness ($500 thousand is MFS), interest paid or accrued during the tax year, on acquisition or home equity indebtedness, secured by a qualified resedence, Minister and Military can deduct interest even if they receive special allowances for homes that is excludeable from gross income, Is the principle residence of the tax payer and any one other residence owned by the tax payer and used for personal purposes for the greater of, 14 days, 10% of the number of days during the year in which it is rented, A taxpayer who has more than (2) residences may select, each year, which residences to use to determine the amount of qualified interest, Acquisition Debt, From, substantially improving, aquiring, contructing, Refinanced debt is treated as aquisition debt secured by qualified residence to the extent it does not exceed the principal amount before refi, Home Equity debt, other than acquisition debt, secured by a qualified residence, to the extent it does not exceed FMV less acquisition indebtedness, is deductible even if the proceeds are used for personal expenditures, except purchase of securites that produce tax free income, points, generally deductible if, loan is used to buy taxpayer home, improve tax payer home, settlement statement clearly designates, points, loan origination fees, computed as a percentage of the principal loan amount, payment of points is an established business practice in the area where the loan is made, points paid do not exceed points generally charged in the area, points paid by the seller are selling expenses that reduce the amount realized on the sale, the purchaser can elect to deduct points on the aquisition idebtedness of a principal residence by reducing the basis amounts of the points, New node, considered prepaid interest, Miscellaneous (line 27), Amortizable premium on taxable bonds, Casualty and theft losses from income producing property, federal estate tax on income in respect of a decedent?, Gambling loss up to the amount of gambling winnings, Impairment-related work expenses of persons with disabilites, Repayements of more the $3000 under claim of right?, Unrecoverd investment in a pension, Limitation on Itemized deductions, AGI over $150,500 ($75,250 if MFS) must reduce the addregate of itemized deductions by lesser of, 80% of otherwise allowable deductions, or 3% of the excess, does not apply to, medical expenses, investment interest expense, casualty or theft losses, gambling losses to the extent of gains

Above the line (Result's in AGI), Alimony, must be made in cash (or cash equivelent, payment received by under a divorce or separation agreement, payments paid to the following on behalf of the spouse, at the written request of the spouse) qualify, mortgage, rent, medical, education, Payee spouse and payor spouse cannot be in the same household, spouses must not file joint returns (with each other), Child Support is not considered alimony, if an alimony payment is reduced based on a contingency related to a child - such as the attainment of a certain age or graduation - the amount of the specified reduction is treated as child support, Moving Expenses, must be work related, Self-employed, full time 39 weeks out of 12 months and 78 out of 24 months period, Employed by others, the new principle place of work must be 50 miles from the taxpayers former residence, measurement is by the shortest commonly traveled route, qualified expenses reimbursed by employer are excluded, must be employed full time at new location 39 weeks in the 12 months period after the move, may be deducted in the year incurred, even if time period is not satisfied, if it doesn't get satisfied, an amended return is required, or the amount of the deduction must be reported as gross income in the following year, must be "direct" expense, moving household, personal effects, travel, including lodging, if an individual other than the taxpayer expenses are deductible if, lived in the old place, will live in the new place, part of taxpayers household, Indirect expenses (not deductible), meals, house-hunting trips, temporary living expenses, related to the sale, purchase, lease, Loss Limitations, loss limited to the smaller of the (3), passive activity rules, cannot claim a deduction or credit greater than the gross income, any excess is deductible or credditable in a future year, passive loss rules are applied after, basis rule limitation (1st), at-risk limitations (2nd), is trade or business, in which the person does not participate, material participation must be, regular, continuous, substancial, determined separately for each activity, Material Participation must satisfy one of the following, participates more than 500 hours, taxpayer participation is substantially all the participation, participation is more than 100 hours and is more than the participation of anybody else, The activity is a "significant participation activity" and taxpayers participation is all such activities exceeds 500 hours, participates in the activity for any (5) years out if the (10) years that proceeded the year in questions, the activity is a "personal service activity" and the taxpayer participated in the activity for any 3 years preceding the tax year in question., Temporary Reg Sec 1.469-5T(a) - taxpayer satisfies "facts and circumstances test" that requires taxpayer to show participation on a, Must participate for at least 100 hours or T/P cannot apply the "Facts and Circumstances" test., Participations by a taxpayers spouse is considered participation by the taxpayer, loss is excess of the amount of otherwise allowable deductions attributable to an activity over gross income attributable to the activivty, Does not apply to, Active income/loss/credit attributable to, active business operations, including gain on, inventory sales, compensations, wages, salary, bonuses, etc..., Portfolio income/loss/credit, interest, dividends, annuities, royalties, related expenses, interest expense, Gains/loss on disposition or property that produces the above income, Casualty and theft losses, any rental activity, is passive even if the participation is "material" unless the taxpayer is in the business of real estate, New node, Vacation home rental, Qualified home mortgage interest, Business Use of home, working interest in an Oil or Gas well (Held through an entity that does not limit the person's liability), amount of basis in activity, at risk rules, loss cannot be greater than the amount at risk, applied seperately to each trade or business or income producing activity, Does not Apply to, Personal Holding Companies, Personal Service Companies, Foreign Personal Holding Companies, Applies to, Individuals, partners in partnerships, Shareholders of S Corps, Trusts, Estates, Closely Held C Corps, the person who is ultimately is bears the financial consequences is the person at risk, Amount at risk, determined at the close of the tax year, initial at risk amount includes, money contributed, recourse debt includes amounts borrowed, to the extent the person has, or property, personal liability, does not include debt if one of the following applies, Property Pledged as security is used in the activity, Insurance, guarantees, stop-loss agreements, etc, (similar arrangements to provide protection from personal liability), the credit is from a person, with an interest in the activity, or one related to taxpayer, real property, includes qualified nonrecourse financing (QNRF), Taxpayer is not personally liable, is secured by real property, in not convertible to an ownership interest, is either, obtained from an unrelated third party, Obtained from a related party but on commercially reasonable terms, Guaranteed by a government entity, Non-recourse debt, excluded from the amount at risk, adjusted basis of property contributed, borrowed amounts, Adjustments to an at-risk amount, Made for events that vary the investors' economic risk of loss, Add contributions of money and property, Subtract, distributions (e.g. from a partnership, liability deductions, recourse, QNRF, tax deductions allowable, Only so much as reduces at risk amount to zero, disallowed losses are carried forward, If the amount at risk decreases below zero, previously allowed losses must recaptured as income, if deduction would reduce basis in property (e.g. depreciation) and part or all of the deduction is disallowed by the at-risk rules, the basis is reduced anyway., Archer MSA's, Health Savings Accounts, Health Insurance Deduction, Qualified Education Loans, Deduction for Education Expense, Self-Employment Deductions, Retirement Savings (IRA) Contributions

Rental Property Expenses, Personal Use Rules, Deductions allowed when Rented..., for the greater of 14 days, Deductions may not exceed rental Income, Deductions NOT allowed when personal use MORE THAN, Vaction Home Rules, greater of, 14 days, 10% of days residence rented, Expenses are also not deducted, Rental income does not need to be reported, other persons who have an interest in property, Relatives, Rented for less than, Reciprocal arrangement, When Fair rental Value is NOT charged, Exception, Property Rented for use as a principal residence, Days spent full time repairing and maintaining property

Gross Income

Business Tax