Question 1

Jack takes a $7,000 distribution from his Health Savings Account.$2,000 is used to pay for X-rays and dental surgery.The other $5,000 to make a down payment on a new car.What are the tax consequences to Jack?

Accepted Answer

The answer of Jack takes a $7,000 distribution from his...

Question 2

Daniel has accepted a new job and is reviewing the retirement plan information.He has a choice of participating in the company's conventional Sec.401(k)plan or a Roth 401(k)plan.Explain the difference between the two plans in terms of employee contributions and retirement distributions from the plan.

Accepted Answer

The answer of Daniel has accepted a new job and...

Question 3

At her employer's request,Kim moves from Albany to Chicago.She incurs $20,000 of costs to move her household goods and to travel to the new location,plus $8,000 of temporary living expenses because the new home was not ready when she needed to start work.Her employer reimburses her the full $28,000 cost associated with the move.She cannot deduct the moving costs,but she is not economically impacted because she is fully reimbursed.

Accepted Answer

The answer of At her employer's request,Kim moves from Albany...

Question 4

A taxpayer moves for employment in November 2016 and pays all of the moving expenses by December 31.Because he cannot satisfy the 39-week employment test,he cannot claim the moving expense deduction until the following year.

Accepted Answer

The taxpayer cannot claim the moving expense deduction until the following year because he cannot satisfy the 39-week employment test. However, the moving expenses paid by December 31 can still be claimed on the tax return for the year in which they were paid.

Question 5

Why did Congress establish Health Savings Accounts (HSAs)? How do HSAs operate?

Accepted Answer

The answer of Why did Congress establish Health Savings Accounts...

Question 6

An employee has unreimbursed travel and business auto expenses.In order the claim the deduction,the employee will report the details (amounts and type of expenditure)on Schedule A (Itemized Deductions)of Form 1040.

Accepted Answer

Unreimbursed employee expenses are not deductible on Schedule A for most employees due to the suspension of miscellaneous itemized deductions subject to the 2% floor under the Tax Cuts and Jobs Act, effective from 2018 through 2025.

Question 7

Avantra Inc.is a professional firm with the professional employee group generally in the top tax bracket and the support staff generally in the 15% tax bracket.Due to rising costs and administrative burden,the company is considering discontinuing its dental and eye care insurance plan and instead giving all employees a $600 raise.Based on insurance records the average employee incurs about $400 of dental and eye care expense per year.Which of the following statements is correct?

Accepted Answer

A)The support staff will prefer the raise because the after-tax raise will be $510 ($600 × 85%)which exceeds their medical costs,but the professional staff will only have $362 ($600 × 60.4%)of after-tax income which is less than the medical costs.

Question 8

Which of the following conditions would generally not favor the rollover of an untaxed retirement fund (e.g.traditional IRA or 401(k)plan)to a Roth account?

Accepted Answer

An advanced age of the taxpayer would generally not favor the rollover of an untaxed retirement fund to a Roth account because there may not be enough time for the tax-free growth in the Roth account to offset the taxes paid at the time of conversion. Options A and B would generally favor the rollover to a Roth account. Option D is incorrect because it is asking for the choice(s) that would not favor a rollover.

Question 9

Raul and Jenna are married and are both working.They are both over age 50.Jenna participates in her employer's Sec.401(k)plan and makes the maximum contribution and enjoys a company matching contribution.Raul's employer does not maintain a retirement plan so he would like to save as much as possible in a tax-advantaged manner for retirement.They expect to report $188,000 of AGI for 2016.
a.What is the maximum amount that Raul can contribute to a traditional IRA and how much can he deduct?
b.What is the maximum amount that Raul can contribute to a Roth IRA and how much can he deduct?
c.How could Raul contribute to both the traditional IRA and Roth IRA to maximize current and future tax savings?

Accepted Answer

The answer of Raul and Jenna are married and are...

Question 10

Discuss the tax treatment of a nonqualified stock option plan.

Accepted Answer

The answer of Discuss the tax treatment of a nonqualified...

Question 11

Johanna is single and self-employed as a technology consultant.She wants to set money aside for her retirement.What tax and financial issues should she consider?

Accepted Answer

The answer of Johanna is single and self-employed as a...

Quiz 9: Employee Expenses and Deferred Compensation