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CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Income Tax Planning

CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Income Tax Planning. Session 2 Itemized Deductions and Personal Exemptions. Session Details. Income Tax Terms. Income Tax Terms. Steps in the Calculation Process. Steps in the Calculation Process. Tax Computation.

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CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Income Tax Planning

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  1. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMIncome Tax Planning Session 2 Itemized Deductions and Personal Exemptions

  2. Session Details

  3. Income Tax Terms

  4. Income Tax Terms

  5. Steps in the Calculation Process

  6. Steps in the Calculation Process

  7. Tax Computation

  8. Itemized Deductions • Medical expenses (after 7.5% or 10% floor) • State & local income taxes (or sales tax through 2013) • Home mortgage interest (including MIP through 2013) • Property taxes • Investment interest expense: Module 6 • Charitable contributions: Module 7 • Casualty & theft losses: Module 4 • Miscellaneous deductions • Tier II miscellaneous itemized deductions • Phaseout based on AGI

  9. Qualified Mortgage Interest • Acquisition indebtedness • Home equity indebtedness • Treatment of points • on acquisition • on refinance • MIP (through 2013)

  10. Miscellaneous Itemized Deductions Miscellaneous Itemized Deductions (not subject to 2% of AGI floor) • Impairment-related work expenses of a handicapped individual • Unrecovered basis in commercial annuity • Gambling losses (to extent of gambling winnings)

  11. Tier II Itemized Deductions Tier II Miscellaneous Itemized Deductions • Collection/determination of a tax liability • Unreimbursed employee business expenses • Production of income • Deducted only to the extent that the total exceeds 2% of AGI

  12. Deductions & Exemptions

  13. Itemized Deduction Phaseout Itemized deductions reduced by lesser of: • 3% of excess of AGI over threshold amount, or • 80% of the allowable itemized deductions

  14. Personal Exemption Phaseout Personal and dependency exemptions are reduced by: • 2% for each $2,500 (or portion thereof) by which AGI exceeds threshold amount

  15. Review Question 1 All of the following are itemized deductions except • local income taxes. • investment interest expense. • casualty and theft losses. • qualified student loan interest.

  16. Review Question 2 Taxable income is the amount • remaining after adjustments to income are subtracted. • from which allowable itemized deductions are subtracted. • used to determine the tax liability. • to which tax credits are applied.

  17. Review Question 3 Janet and Bruce Robinson, both age 68, are married taxpayers filing jointly with itemized deductions consisting of the following: Their AGI for 2014 is $457,250. What is the amount of their allowable itemized deductions? •  $34,400 • $35,034 •  $40,495 •  $58,955

  18. Review Question 4 Tyler and Liz Slater, married taxpayers filing jointly, have two dependent children. Their AGI for 2014 is $355,300. What is the amount of personal and dependency exemptions that the Slaters may deduct? • $6,636 • $9,164 • $9,480 • $15,800

  19. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMIncome Tax Planning Session 2End of Slides

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