EA Part 1 cheat sheet

Filing status is determined as of December 31; the five statuses are single, married filing jointly, married filing separately, head of household, and qualifying surviving spouse.

2024 standard deduction: $14,600 single, $29,200 MFJ, $14,600 MFS, $21,900 HOH; add $1,550 per person for age 65+ or blind on a joint return and $1,950 for single or HOH filers who are 65+ or blind.

Head of household requires the taxpayer to be unmarried or considered unmarried, to have paid more than half the cost of keeping up the home, and to have a qualifying person who lived there more than half the year (a dependent parent need not live there).

Qualifying surviving spouse: the spouse died in one of the two prior years, the taxpayer has a dependent child, has not remarried, and paid more than half the cost of maintaining the household.

Qualifying child tests: relationship, age (under 19, or under 24 as a full-time student), residency more than half the year, support (the child does not provide more than half of their own support), and no joint return filed.

Qualifying relative tests: not a qualifying child of anyone, gross income below $5,050 for 2024, more than half of support provided by the taxpayer, and either a listed relative or a member of the household for the full year.

Failure-to-file penalty is 5% of the unpaid tax per month or part month, capped at 25%; failure-to-pay is 0.5% per month, capped at 25%; when both apply for the same month, the failure-to-file penalty is reduced by the failure-to-pay amount.

Assessment statute of limitations: three years from the filing date generally, six years if omitted gross income exceeds 25% of reported gross income, and no limit for fraud or a failure to file.

Estimated tax is required when tax due after withholding is $1,000 or more; the safe harbor is 90% of current-year tax or 100% of prior-year tax (110% if prior-year AGI exceeded $150,000).

Gross income includes wages, interest, dividends, rents, royalties, business income, gains, unemployment compensation, gambling winnings, and prizes, with noncash prizes valued at fair market value.

Excludable items include gifts, inheritances, life insurance death proceeds, municipal bond interest, child support, workers' compensation, welfare benefits, veterans benefits, and qualified scholarships covering tuition and required fees.

Sec. 121 exclusion: up to $250,000 of gain ($500,000 MFJ) on a principal residence owned and used as such for two of the five years before sale, available once every two years.

2024 long-term capital gain rates: 0% up to $47,025 single / $94,050 MFJ, 15% up to $518,900 single / $583,750 MFJ, and 20% above; short-term gain is taxed at ordinary rates.

Net capital losses offset ordinary income up to $3,000 per year ($1,500 MFS); any excess carries forward to later years, and losses on personal-use property are not deductible.

Social Security provisional income = AGI + tax-exempt interest + 50% of benefits; up to 50% of benefits is taxable above $25,000 single / $32,000 MFJ, and up to 85% above $34,000 / $44,000.

Kiddie tax for 2024: the first $1,300 of a child's unearned income is absorbed by the standard deduction, the next $1,300 is taxed at the child's rate, and the excess is taxed at the parents' marginal rate.

Basis rules: cost basis for purchases, carryover basis for gifts (dual basis applies when fair market value at the gift date is below the donor's basis), and stepped-up or stepped-down basis to fair market value at death.

Cancellation of debt income is excluded in bankruptcy, to the extent of insolvency, for qualified principal residence debt (up to $750,000 through 2025), and for certain student loan discharges.

Itemized deductions include medical expenses above 7.5% of AGI, state and local taxes capped at $10,000 ($5,000 MFS), home mortgage interest, charitable contributions, and casualty losses in federally declared disasters.

Medical expenses include insurance premiums, prescription drugs, and mileage at 21 cents per mile for 2024; they are deductible only as an itemized deduction and only to the extent total expenses exceed 7.5% of AGI.

Mortgage interest is deductible on acquisition debt up to $750,000 ($375,000 MFS) for loans incurred after December 15, 2017; home equity interest is deductible only when the proceeds buy, build, or substantially improve the home.

Charitable limits: 60% of AGI for cash gifts to public charities, 30% for appreciated long-term capital gain property, and 20% for gifts to private foundations; a written acknowledgment is required for gifts of $250 or more.

QBI deduction is 20% of qualified business income plus 20% of qualified REIT dividends; above the 2024 thresholds of $191,950 single and $383,900 MFJ, W-2 wage and UBIA limitations apply.

Above-the-line deductions include educator expenses up to $300, HSA contributions, moving expenses for active-duty military only, one-half of self-employment tax, self-employed health insurance, and student loan interest up to $2,500.

Child Tax Credit is $2,000 per qualifying child under age 17, with a refundable portion of $1,700 for 2024; the phase-out begins at MAGI of $200,000 single and $400,000 MFJ.

Education credits: American Opportunity Credit up to $2,500 per student (40% refundable) for the first four years; Lifetime Learning Credit is 20% of up to $10,000 of expenses and is nonrefundable.

Child and dependent care credit is 20% to 35% of up to $3,000 of expenses for one child or $6,000 for two or more, with the percentage reduced as AGI rises; the earned income credit is refundable and keyed to earned income and AGI.

Computation order: gross income minus adjustments equals AGI; AGI minus the standard or itemized deduction and the QBI deduction equals taxable income; apply the rate schedule, subtract credits, then add other taxes.

2024 single brackets: 10% to $11,600; 12% to $47,150; 22% to $100,525; 24% to $191,950; 32% to $243,725; 35% to $609,350; 37% above.

Married filing separately brackets are exactly half of the married filing jointly thresholds, and joint thresholds are double the single thresholds up to the 35% bracket; head of household has its own schedule.

Preferential rates apply by stacking: net long-term capital gain and qualified dividends sit on top of ordinary taxable income, so the rate depends on total taxable income, not on the size of the gain alone.

Self-employment tax is 15.3% of 92.35% of net self-employment earnings (12.4% Social Security up to the $168,600 wage base for 2024 plus 2.9% Medicare on all earnings); one-half of the tax is an above-the-line deduction.

Additional taxes: 0.9% Additional Medicare tax on wages and SE income above $200,000 single / $250,000 MFJ / $125,000 MFS, and 3.8% net investment income tax on the lesser of net investment income or MAGI above the same thresholds.

Alternative minimum tax: 26% on the first $232,600 of AMTI above the exemption ($116,300 MFS) and 28% above; the 2024 exemption is $85,700 single and $133,300 joint, phased out at 25% of excess AMTI.

Credits reduce tax dollar for dollar; refundable credits (earned income credit, additional child tax credit, refundable portion of the American Opportunity Credit) can produce a refund, while nonrefundable credits cannot reduce tax below zero.

Tax is read from the tax tables when taxable income is under $100,000 and computed from the tax rate schedules when taxable income is $100,000 or more.

Circular 230 duties include Sec. 10.22 due diligence, Sec. 10.34 return position standards, Sec. 10.37 written advice requirements, Sec. 10.51 disreputable conduct, and Sec. 10.21 notification of client errors or omissions.

Return position standards: a position needs at least a reasonable basis; substantial authority supports an undisclosed position, and more likely than not is the threshold for tax shelters and reportable transactions.

Preparer penalties under Sec. 6694: the greater of $1,000 or 50% of fees for an understatement from an unreasonable position, and the greater of $5,000 or 75% of fees for willful or reckless conduct.

A preparer must sign the return, enter a valid PTIN, furnish the taxpayer a copy, and retain records for three years; failure to meet each requirement triggers a separate penalty under Sec. 6695.

Earned income credit due diligence requires completing Form 8867, interviewing the client, documenting eligibility, and retaining records; the Sec. 6695(g) penalty is adjusted for inflation each year.

Authorization forms: Form 2848 grants power of attorney for representation before the IRS; Form 8821 authorizes disclosure of tax information only; Sec. 7216 restricts disclosure or use of return information by preparers.

Amended returns and refund claims: Form 1040-X must be filed within three years after the original return was filed or two years after the tax was paid, whichever is later.

Collection alternatives include installment agreements, offers in compromise based on doubt as to liability or collectibility, and currently not collectible status; a Collection Due Process hearing follows a final notice of intent to levy.

Schedule C reports sole proprietorship income and expenses and flows to Schedule SE for self-employment tax; Schedule E reports rental, royalty, partnership, S corporation, and fiduciary income.

Sec. 179 expensing for 2024 is capped at $1,220,000 with a $3,050,000 investment phase-out and cannot exceed business taxable income; bonus depreciation is 60% for 2024, 40% for 2025, and 20% for 2026.

MACRS uses the half-year convention unless more than 40% of personal property is placed in service in the fourth quarter, which forces the mid-quarter convention.

Form 1040-NR is filed by nonresident aliens; fixed or determinable annual or periodical income is taxed at a flat 30% unless a treaty reduces the rate; residency turns on the green card and substantial presence tests.

Foreign reporting: Form 2555 excludes up to $126,500 of foreign earned income for 2024, Form 1116 claims the foreign tax credit, and FinCEN Form 114 (FBAR) is due when foreign accounts exceed $10,000 in aggregate.

Gift and estate: the 2024 annual exclusion is $18,000 per donee and the lifetime gift and estate exemption is $13,610,000; Form 709 is filed for gifts above the annual exclusion or for gift splitting.

Trusts and estates reach the 37% top rate at roughly $15,200 of 2024 taxable income and file Form 1041; a child's unearned income subject to the kiddie tax is computed on Form 8615.

Special employment rules: household employees are reported on Schedule H once cash wages reach $2,700 for 2024; clergy report a housing allowance for self-employment tax and may elect exemption under Sec. 1402(e).

Farmers may use income averaging on Schedule J and may file by March 1 without a failure-to-file penalty when at least two-thirds of gross income comes from farming.