[REG] Above the line deductions(deductions for AGI), Sch 1 10 items

1040 line 10, 10 items from Sch 1

1. Educator expense (1040, Sche 1,Line11)

- up to $300($600 MFJ), unreimbursed qualified expenses is deductible

- Qualified expenses: books, supplies, computer equipment and materials

 

2. Health Savings Account, (1040, Sche 1,Line13)

 건강연금?, 추후 병원비를 위해 계좌에 돈을 넣어놓고 투자를 해서 돈을 불리는 형식임

- Pretax contribution

    EE가 HSA를 택하면 회사에서 납입금액만큼 제하고 차인금액( W-2, box1)을 지급함

    W-2, box3는 전체급여, box 1는 납입된 HSA 금액을 제하고 받는 차인금액이 적힘

 - Workers with high-deductible insurance plan 있어야 가능(3K annual, family coverage)

 - Qualified drugs(only those prescribed by a physician), if not 20% additional tax
 - out-of-pocket exp limitation 7.5K self-only coverage

 - contribution up to $3,850/Y, distribution 55 or older

 - tax-free int 

* Archer medical savings account(MSA)

   no new MSA established after 2007, for SE individual, EEs of small biz(less than 50)

 

 

3. 50% of self-employment tax(sch SE & 1040, sch 1 line15)

   Net income (sch C, F)

   x 92.35%

   Reduced Base

   x 15.3%

   Self-employment tax(social security & medicare)

   x 50%

   self-employment tax deduction(deduction for AGI)

 

4. Self-employed retirement plans (1040, Sche 1, Line16)

fully taxable as ordinary income, early late distribution penalties as other retirement plans

1)-1 Self-employed Pension(SEP, Keogh)

- Maximum contribution and deduction, lessor of $66K or (Self-employed income-SE tax) 20%

- contributions made including extension can still be deductible for the year

 

1)-2 Solo 401K

- Maximum contribution and deduction, lessor of $66K or (Self-employed income-SE tax) 20%

 

2)-1 Simple IRA( saving incentive match plans for EEs)

- 100% of (SE net income - SE tax deduction) or  $15.5K

 

2)-2 Qualified Pension(retirement plan) and profit sharing plan (1040, Sche 1, Line4)

- The qualified retirement plan is an employer-sponsored plan that meets IRS US labor department requirements

- ER deductible / EEs are taxed when withdrawing from the pension plan at retirement(contribution + earnings)

- Traditional pensions(DB), 401(k)(DC), profit-sharing plans

- Return of capital portion(EE contributed) are not taxable

Employees cost(EE contribution) / Expected total pension payments x payments received

- If EE dies before recovery of EE's cost, deduct in miscellaneous deduction on Sch A in the final tax return

- rolling distribution within 60 days into other Qualified plan or IRA > defer tax

 

 

 

5. Self-employed health insurance deduction (1040, Sche 1, Line17)

deduct 100% of the health insurance premiums paid for the taxpayer, spouse, dependent

* health insurance premium은 schA에서도 공제받을 수 있으나, SE는 여기서 받는게 유리한듯하다.

 

 

6. Penalty on early withdrawal of savings (1040, Sche 1, Line18)

- Interest income is included in the year accrued

- forfeited interest due to early withdrawal > deducted in the year forfeited

 

 

7. Alimony paid (1040, Sche 1, Line19a)

- child support is not taxable

- Property settlements, nontaxable, nondeductible

 

 

8. Individual Retirement Arrangement(IRA) (1040, Sche 1,Line20)

	Traditional IRA	Nondeductible Traditional IRA	Roth IRA
Contribution	6.5K annual contribution, +1K for age 50 and older / earned income
Deductibility	$ 6K	Non-deductible	Non-deductible
Distribution	Principal: taxable Earnigs: Taxable	Principal: Non-taxable Earnigs: Taxable	Non-taxable (if qualified distribution, not taxable)
Phase-out for MFJ NP spouses	105K - 125K 198K - 208K   66K - 76K	190K - 220K   95K - 110K

 

Traditional IRA

- Earnings on traditional IRA, taxable in the year of receipt as ordinary income

- taxpayer can avoid current taxation by rolling the distribution into another IRA

- Early withdrawal, before 59 1/2 > 10% penalty

  Exception 1) Qualified higher education expenses 2) Firstime homebuyer, $10K cap

                   3) Medical exp 4) Childbirth or adoption

- minimum distributions required, April 1 of age 73

 

- Limitation

   The amount of contribution & deduction limited to 

Participation in ER-sponsored Retirement plans	Deduction for spouse, not active
MFJ            $116K-136K Not MFJ     $73K-83K	MFJ            $218K-228K(couple's AGI) MFS           $0K-10K(each spouse)

 

- Contribution due

 

 

Roth IRA

- contribution not deductible, distribution not taxable(qualified)

- Allowable contribution

Filling status	Unmarried	MFJ	MFS
Phase out	$138K - $153K	$218K - $228K	$0K - $10K

 

 

 

9. Student loan interest deduction (1040, Sche 1, Line21)

- Interest on qualified education loan(student loan exp), deductible 

- deductible up to $2.5K for taxpayer, spouse, dependents

- Qualified education expenses: tuition, fees, room, board, related education expenses

- phased out for MFJ, AGI 155K~185K(23)

* married must file MFJ only

* must go directly to the qualified education items

* Coverdell education savings accounts (Coverdell ESA)

- up to $2K contribute to ESA, ESA contribution not deductible

- Paid for higher education, distribution nontaxable

 

 

10. Dury duty pay returned to the employer (1040, Sche 1, Line24a)

- Jury duty pay remitted to the employer in exchange for regular compensation is deducted