REGULATION 2 Kenneth Rivera Tax Partner Parissi PSC [email protected].

REGULATION 2

Kenneth RiveraTax PartnerParissi [email protected]

AJUSTES

Adjustments

Educator IRA Student Loans Tuition & Fee HSAs Moving Attorneys Fees Domestic Production

Self Employment FICA

Self Employment Insurance

Self Employment Retirement (Keogh)

Interest Alimony

Educator Expenses

$250

Qualified Educator – K-12

Expired on 2010, was extended

IRAS

Tradicional

Coverdell (Educativa)

Roth

IRA Tradicional

Límite $5,000 por persona ($10,000) si es casada.

Se limita por ingreso devengado.

Catch UP 50 años, $1,000 adicionales

Ingreso Devengado

Salario Comisiones Bonos Alimony!!!!! No incluye:

Interés Dividendos Anualidades Pensiones

IRA Roth

Limite $5,000 por persona ($10,000) si es casada.

No es deducible. Ingreso es exento.

La aportacion se limita por lo que se aporte a una IRA Tradicional.

Distribución

De la aportación es exenta completa Del incremento

Más de 5 años YHardship

59 ½ años Muerte Incapacidad Primera Residencia

IRA Coverdell (Educativa)

Limitada a $2,000 por beneficiario.

No es deducible, pero el ingreso es exento (Uso Educativo)

Beneficiary – Under 18Time Limitation – 30 years

MSA

IRAs for Health Care

R2-59(1)

MOVING

PruebasDistancia 50 millasTiempo

39 / 52 (empleado) 78 / 104 (cuenta propia)

Gastos mover muebles y familia. NO INCLUYE COMIDAS

Pucho

ACTUAL30

ALT. A

ALT B

70

90

70(30) 40 90

(30) 60

R2-59(2)

Self Employment

Self Employment Taxes – 50%

Self Employment Health Insurance – 100%

R2-59(3)

KEOGH

Self Employed

Limitation 2010 & 2011 - $49,000; 2012 - $50,00025% del net income (luego del Keogh y ½ del

Self Employment Tax)

Ejemplo

Pancho tiene ingreso neto de $107,000 y su self employment tax fue de $14,000. Cuanto puede aportar a su cuenta KEOGH.

Ejemplo (cont)

107,000 (7,000) ½ Self Employment

100,000 20,000 (20% del income antes)

80,000 Ingreso neto x 25%

20,000

Penalty

Concept

Example

Alimony vs. Child Support

RECIPIENT Payor

CHILD

Alimony Payments

MUST BE PAID IN CASHEXCEPT: RENT, MORTGAGE,

TUITION, TAXES

CHILD SUPPORTPAID FIRSTCONDITIONAL

New Deducitions

Attorney Fees Paid (Discrimination Cases)

Domestic Production Activities

STANDARD OR ITEMIZED

Standard Deduction

Depends on Status

Increased for elderly or blind

Dependent of another

New Deduction Real Property - $500 / $1,000 MFJ

R2-59(4)

Standard Deduction

Single - $5,950

HH - $8,700

Married F Joint - $11,900

Married F Separately - $5,950

COMITE CHARITABLE O CASUALTY MEDICAL INTEREST TAXES EMPLOYEE EXPENSES

CHARITABLEAPRECIADA

LARGO PLAZO

DEDUCTION 50% OF AGIVALUED AT FMV

DEDUCTION 50% OF AGIVALUED AT COST

DEDUCTION 30% OF AGIVALUED AT FMV

NO

NO

SI

SI

Ejemplo 1

Yelitza compró un cuadro por $25,000. Tres años después cuando el cuadro vale $22,000 lo regala a una iglesia. Ella tiene un AGI de $40,000. Cuanto deduce?Valora FMV ($22,000)Limitación 50% del AGI ($20,000)

Ejemplo 2

Lynnette compró un cuadro por $25,000. Tres años después cuando el cuadro vale $30,000 el lo regala a una iglesia. Ella tiene un AGI de $40,000. Cuanto deduce?Valora FMV ($30,000)Limitación 30% del AGI ($12,000)

R2-60(7)

CASUALTIES (PERSONAL)

STEP 1: DETERMINE PERSONAL CASUALTY STEP 2: SUBTRACT INSURANCE STEP 3: SUBTRACT $100 (PER CASUALTY)  STEP 4: SUBTRACT 10% OF AGI

Ejemplo

Zayas tiene un bote que perdió en un fuego. El bote tenia una base de $80,000 y el seguro le reembolso $15,000. El AGI fue de $30,000.

Ejemplo

Perdida 80,000 Seguro (15,000) Perdida Neta 65,000

“Deducible” (100) 10% del AGI (3,000) Perdida Deducible 61,900

R2-61(8)

MEDICAL EXPENSES

STEP 1: DETERMINE AND ADD VALID MEDICAL EXPENSES (OJO: LOST PROFIT IS NOT CONSIDERED) 

STEP 2: SUBTRACT MEDICAL INSURANCE  STEP 3: SUBTRACT 7.5% OF AGI  

62-60(5)

Interest

Se limita a interes HIPOTECARIO (Mortgage o Home Equity Loan)

Investment Interest ExpenseNet Investment Interest Income

Taxes

State Income TaxSales Taxes InsteadForeign Taxes if not taken as a credit

State & Foreign Real Property Tax

State Personal Property Tax

R2-60(6)

Ejemplo – Pagos Income Tax Estatal Durante 2004 Rebecca pago

Estimada 4/15 1,000Estimada 6/15 1,000Estimada 9/15 1,000Estimada 1/15/05 1,000

Además pago $3,000 en 4/15/04 Cuanto Deduce?

Employee - Concept

Gastos que se incurren como empleado para la generación de ingresos

Employee - Computation

Gladys tiene gastos como empleada de $4,000. Tiene un AGI de $90,000. Su deduccion se computa de la siguiente forma:

$4,000

menos (1,800) 2% de $90,000

2,200

Tipos de Gastos

Unreimbursed Expenses Reimbursed

Travel Commuting

Meals Educational Uniforms Business Use of Home

Tipos de Gastos (cont.)

Employment Agency Safe Deposit/Investment Advice Professional Journals Tax Preparation (Accounting & Legal)

No divorce or Will

Not Subject to 2% Gambling Federal Estate

R2-61(9) R2-62(10)

Tax Credits

Non Refundable

Child Dependent Elderly Education

Lifetime American Opportunity (partial)

Adoption (partial) Retirement Savings Foreign Tax General Business Credit

Refundable

Earned Income Credit Child Tax Credit

Additional (3 children / tax paid) Withholding Excess Social Security Long Term (NEW) American Opportunity Making Work (2008 – 2010) Adoption (2010 and forward)

R2-63 (12)

CHILD CARE EXPENSES

1. DETERMINE VALID EXPENSES1. To generate Income

2. Less than 13 years or disabled

2. LIMIT THE EXPENSES1. $3,000 FOR ONE CHILD

2. $6,000 IF MORE THAN ONE

3. CREDIT SHALL BE VALID PERCENTAGE TIMES THE AMOUNT OF THE EXPENSE

VALID PERCENTAGE

USUALLY IS 35% HOWEVER IS REDUCED FOR 1% FOR

EACH FOR EACH $2,000 OF AGI IN EXCESS OF $15,000

MINIMUM RATE IS 20% Pg 2-37(Example)

CREDIT ELDERLY

INITIAL AMOUNT

LESS: SOCIAL SECURITY

LESS: REDUCTION

EQUALS CREDIT BASE

X 15%

EQUALS CREDIT

CREDIT ELDERLY

INITIAL AMOUNT $5,000 $7,500 (BOTH OVER 65)

REDUCTION AGI LESS: $7,500(SINGLE) OR $10,000 (MARRIED) X 50% EQUALS REDUCTION

Pg. 5-35 (Example)

EDUCATIONAL CREDITS

AMERICAN OPPORTUNITY (HOPE) CAN BE USED FOR FIRST 4 YEARS CREDIT LIMITATION - $2,500

100% OF FIRST $2,000 25% OF SECOND $2,000

40% Refundable

LIFETIME NO LIMIT IN YEARS CREDIT LIMITATION 20% OF FIRST $10,000

Educational Credits (Cont.)

QTPTuition CreditsBeneficiaryElegible InstitutionDistribution are exempt

No deduction on contributions

Other Credits

Adoption CreditLimited to $12,650 (2012) R2-63(11)

Retirement Savings Contribution General Business Credit Work Opportunity Welfare to Work Foreign Tax Credit

Limitation 1-10

FTC – Ejemplo 1 - $100 de US y 20 de

Mexico (se incluyen los 120 en US) US MEXICO

Ingreso $120,000 $20,000

Tasa 40% 10%

Tax 48,000 2,000

Crédito 2,000 n/a

Tax Final 46,000 2,000

FTC – Ejemplo 2 - $100 de US y 20 de

Mexico (se incluyen los 120 en US) US MEXICO

Ingreso $120,000 $20,000

Tasa 40% 60%

Tax 48,000 12,000

Crédito 8,000* n/a

Tax Final 40,000 12,000

* Credito se limita ($20,000 X 40%)

CHILD TAX CREDIT

$1,000 PER CHILD UNDER 17 3 OR MORE ADDITIONAL CREDIT CARES Refund Rules

Credit up to Earned income less $12,550 times 15%.

MISCELANEOUS CREDITS

EARNED INCOME CREDIT – REFUNDABLE R2-63(13)

INCOME TAX WITHHELD EXCESS SOCIAL SECURITY –

PATRONO MORON ALTERNATIVE MINIMUM TAX

New Credits

Small Employer Pension Start Up50% of the first $1,000

SBA Healthcare35% of plan premiums

Health Coverage (individual)80% of premiums

Residential Energy30% of investment

ALTERNATIVE MINUMUM TAX

AMT

TAXABLE INCOME BEFORE EXEMPTIONS 

ADJUSTMENTS (STD. DEDUCTION, Medical 2.5%, Interest (home equity), Miscellaneous, State and Local Income Taxes (MIMs),

MACRS DEPRECIATION) 

PREFERENCES (TAX EXEMPT PRIVATE ACTIVITY BONDS) 

ALTERNATIVE MIN. TAX. INCOME (AMTI) 

LESS: EXEMPTION ($48,450 OR $74,450)

AMT (CONT)

MULTIPLY BY RATE 

LESS: FOREIGN TAX CREDIT 

EQUALS: TENTATIVE MINIMUM TAX 

LESS: REGULAR INCOME TAX 

EQUALS: AMT 

***PHASEOUT APPLIES TO EXEMPTION

PHASE OUT

AMTI

LESS: $150,000 ($112,500)

DIFFERENCE

X 25%

REDUCTION TO EXEMPTION

PHASEOUT (CONT.)

EXEMPTION

LESS: REDUCTION TO EXEMPTION

EQUALS: ACTUAL EXEMPTION

R2-63(13) R2-63(14) R2-64(15)

TAX PROCEDURES

TIEMPO PARA RECLAMAR

AUDITAR 3 años 6 años No Limite

REINTEGRO 3 de la radicacion 2 del pago

R2-64(16)

ESTIMATED TAXES – IND.

LESS THAN $1,000

90% OF CURRENT YEAR

100% OF PRIOR YEAR IF AGI > $150,000 110%

R2-64(17)

Questions???