Term
| Upon what are the Democrats and the President Agreed? |
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Definition
1. They must increase domestic investment levels
2. Congress needs to make a decision on the "lockout" of overseas profits
3. Need to increase infrastruvture and fund these projects for job creation |
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Term
| How much did GE report in unrepatriated foreign earnings in 2013? |
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Definition
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Term
| In total, how much overseas earnings have accumulated without being repatriated back to the U.S.? |
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Definition
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Term
| How did UBS allegedly enable wealthy clients to evade US taxes? |
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Definition
Through investments largely banned in the US - Bearer securities
These were phased out of the US financial system in 1982 - they function like cash allowing whoever holds the certificate to anonymously claim its value |
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Term
| In what criminal activity did one or more UBS employees allegedly engage? |
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Definition
| Bank employees allegedly discussed how to deal with the potential legal problems, and how to hide them from the authorities in regards to bearer securities |
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Term
| Characteristics of bearer securities |
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Definition
1. Issued In two ways - (coupon) bonds and securities (riskier)
2. Bonds are issued by banks as debt certificates in large denominations that can be redeemed at certain banks by whoever possesses them
3. Companies issuing them typically don't register the owners or track transfers of ownership
4. They can be easily stolen and cash, making them risky
5. By keeping an interest-bearing account or document with no ownership trail, and no forms filed to the IRS, the holder of such a certificate can hide assets and income from tax authorities
6. Bearer bonds can also be maintained strictly as an electronic account, generating a set rate of return |
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Term
| What share of total income was received by the top 3% of families in 2013? |
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Definition
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Term
| Has the share of total income received by top 3% of families increased in recent years? |
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Definition
| Yes - it was 27.7% in 2010 |
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Term
| How has the inflation-adjusted income of families in the bottom 40% of income earnings changed in recent years? |
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Definition
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Term
| What share of total wealth was held bu the top 3% of families in 2013? |
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Definition
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Term
| Has the share of total wealth held by the top 3% of families increased in recent years? |
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Definition
| Yes - it increased from 44.8% in 1989 |
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Term
| What benefits does Luxembourg provide that result in its being a tax haven country? |
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Definition
1. Effective tax rate is 4% compared to the US' 35%
2. Online retailers in Luxembourg are allowed to use its tax-rate for e-commerce sales
3. Tax treaties are in place to avoid companies from being taxed twice
4. Adopted an EU directuve allowing companies to pay taxes in a European HQ rather than where subsidiaries operateCompanies present a holding structure to the tax authority before putting into place - allows them to see how its tax bill would be calculated - 5 year binding structure once approved
6. Companies can have their tax applications approved in 1 day |
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Term
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Definition
| In such a transaction, a US company moves its tax address overseas, usually through a merger with a foreign company |
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Term
| What is the tax motivation for inversions? |
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Definition
| A company becomes a subsidiary of a new parent company in another country for the purpose of falling under more beneficial tax laws - used to move to a lower tax domicile by merging with a European company |
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Term
| Business related deductions for AGI |
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Definition
Sole proprietorship deductions (rent, depreciation, salary, advertising)
Net losses from sales of capital assets
The individual's share of losses from investments in flowthrough business entities |
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Term
| Special deductions for AGI |
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Definition
Student loan interest
Health savings account deposits
Employment related moving expense
Education expenses
Investments in pensions made by self-employed taxpayers |
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Term
| 3 categories comprising deductions from AGI |
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Definition
Standard deduction
Itemized deduction
Personal and dependency deductions |
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Term
| What groups are provided additional standard deductions? |
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Definition
Dependents who file their own tax returns
Taxpayers who are 65+ and/or blind |
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Term
| On schedule A, what are the most common items deducted by taxpayers? |
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Definition
Taxes
Home mortgage interest, interest of home equity loan
Charitable gifts
Miscellaneous expenses exceeding 2% of AGI |
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Term
| What are charitable gifts deductible at? |
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Definition
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Term
| What taxes are not deductible? |
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Definition
|
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Term
| Common Miscellaneous expense deductions |
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Definition
Unreimbursed business expenses
50% of expenses for meals and entertainment
Safe deposit box rental
Tax return preparation fees
Investment counseling fees |
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Term
| What types of people are generally benefitted by itemizing deductions? |
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Definition
Individuals who own their own home
- Real estate taxes and interest paid on mortgages |
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Term
| When does the phase-out for AGI begin for singles and married taxpayers? |
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Definition
Single - $254,200
Married - $305,050 |
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Term
| What is the phase-out percentage per dollar of AGI? |
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Definition
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Term
| What type of deductions do the large majority of renters recognize? |
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Definition
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Term
| What is the phaseout limited to? |
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Definition
| 80% of the itemized deductions subject to phaseout |
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Term
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Definition
| Deduction - (Income - 254,200) x 3% |
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Term
| Which individuals who file a tax return are eligible to deduct a personal exemption? |
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Definition
| All except individuals eligible to be a dependent of another taxpayer's return |
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Term
| When does the phase-out for personal and dependency exemptions begin? |
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Definition
Married taxpayers - When AGI reaches $305,050 - complete at $427,550
Single taxpayers - $254,200 - complete at $376,700 |
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Term
| 2 types of people who are eligible for dependency exemptions |
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Definition
Qualifying child
Qualifying relative |
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Term
| Criteria for a qualifying child |
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Definition
Someone who:
1. Lives in the taxpayer's home for over half the year
2. Is the taxpayer's child, stepchild, adopted child, foster child, brother, sister, half-brother/sister, stepsibling (not Cousins)
3. Is under 19 years old
4. Does not provide over half of his/her own support for the year
5. Is a US citizen or resident of US, Canada, or Mexico and must not file a joint return for the year |
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Term
| Who does the term full-time student apply to? |
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Definition
| A person who is considered fulltime by their educational institution for any 5 months of the year |
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Term
| What types of personal expenses are not deductible? |
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Definition
Homeowner's insurance
Consumer interest from credit cards
Personal loans |
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Term
| The 5 tests to determine a qualifying relative |
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Definition
1. Support test
2. Gross income test
3. Relationship or member of the household test
4. Joint return test
5. Citizenship or residency test |
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Term
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Definition
| The taxpayer must provide more than 50% of dependency support |
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Term
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Definition
| Dependent's gross income recognized for tax purposes < 3,950 (exemption amount) |
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Term
| Relationship or member of the household test |
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Definition
| Must be a relative of the taxpayer or member of the taxpayer's household (no cousins) |
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Term
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Definition
Must not have filed a joint return with spouse
- If the only reason a joint return is filed is to get a refund and no return is otherwise required, this test is satisfied |
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Term
| Citizenship or residency test |
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Definition
| US citizen or a resident of the US, Canada, and Mexico |
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Term
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Definition
Child must be under 17 years old
Qualify as a qualifying child
$1,000 credit/child
Phaseout begins at $75,000 and $110,000 for singles and married filing jointly |
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Term
| Most common additional tax for individuals |
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Definition
| Payroll tax (Federal Insurance Contributions Act) on salary |
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Term
| What is the maximum amount of payroll tax the Federal government withholds? |
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Definition
15.3%
7.65% from employees
7.65% from employers |
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Term
| Maximum amount of salary subject to the 15.3% federal payroll tax |
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Definition
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Term
| What happens after the $117,000 payroll tax threshold? |
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Definition
+1.45% paid by employees
+1.45% paid by employers
Employers withhold additional 0.9% on wages above $200,000 for singles and $250,000 for married filing jointly
- Not paid by employers |
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Term
| Indiana state flat rate tax on AGI |
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Definition
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Term
| What is the self-employment tax based on? |
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Definition
| Self-employment net income |
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