Reference no: EM132972431

Taxes affect you your entire life. Learning how to avoid taxes by using the IRC to your advantage is essential to your financial success.

Problem 1. Eligible taxpayers have several deadlines by which they can make contributions to their individual retirement account (IRA). According to tax law, what is the deadline for making these contributions?

Problem 2. Taxpayer distributions from traditional 401(k) plans are taxed as ordinary income. What type of plans are not taxed as ordinary income?

Problem 3. An early distribution penalty of 10% is due from taxpayers who withdraw retirement funds early. Exemption from this penalty exists for what reasons?

Problem 4. The 10% early distribution penalty is due from taxpayers who withdraw funds from their retirement early. What age is considered early?

Problem 5. Contributions to a Roth IRA for 2019 are limited. List the limited contributions.

Problem 6. A taxpayer can directly transfer funds from a traditional IRA to a Roth IRA. This action is called a rollover. What is true about the rollover amount?

Problem 7. The IRS tax law provides a saver's credit to encourage lower income taxpayers to contribute to a retirement savings account. The credit is given in addition to any other deduction allowed for the contribution. What is the maximum saver's credit that a taxpayer could earn?

Problem 8. The gain or loss on the sale of a residence is computed by subtracting the basis of the residence from the sales price. What is not a general rule for determining the basis of the residence?

Problem 9. The gain or loss on the sale of a personal residence is treated differently than a gain or loss on the sale of other capital assets. A loss is nondeductible. A gain that is higher than the allowed exclusion is usually taxed as a long-term capital gain. What are the characteristics of exclusionary rules?

Problem 10. There are nontax benefits associated with owning a second home. What do these nontax benefits include?

Problem 11. What are the ways a taxpayer can use a rental property as an investment that will have additional value?