Transcript CERTIFIED FINANCIAL PLANNER™ CERTIFICATION …

Welcome
©2015, College for Financial Planning, all rights reserved.
Expectations of Students
•
•
•
•
Time/energy commitment
Read assignments before class
Tested on all LOs
This course will enable you to:
o be eligible to sit for the
CFP® Certification
Examination
o better serve clients/
grow your business
o be successful on the
College’s end-ofcourse examination
1-2
For Optimal Performance
The quality of your Internet-streamed session depends on
your connection:
Reboot your PC before each session to refresh
memory.
Directly connect to the Internet. Delete cookies and
temporary Internet files each week.
Close other programs while attending your live
online class.
Before each session, in your live class, go to Meeting then
Audio Setup Wizard to adjust your settings.
These steps resolve 90% of issues.
1-3
Housekeeping Items
1. Professor contact information
 2.3.
4.
5.6.
7.

in eCampus
Tutorial in Lobby
Status changes
Text chat
Files for students
Recordings
Access Poll Layout


1-4
CERTIFIED FINANCIAL PLANNER CERTIFICATION
PROFESSIONAL EDUCATION PROGRAM
Income Tax Planning
Session 1
Form 1040—Above the Line
©2015, College for Financial Planning, all rights reserved.
Session Details
Module
1
Chapter(s) 1 and 2
LOs
1-1
Describe terms related to income taxation.
1-2
Identify the steps in the tax calculation
process.
1-3
Identify items of inclusion, exclusions,
deductions, or tax credits.
1-4
Analyze a situation to calculate total income
for tax purposes.
1-5
Analyze a situation to calculate adjusted gross
income.
1-6
Steps in the Calculation Process
Determine
total (gross)
income for tax
purposes.
Subtract
adjustments to
income.
Equals AGI
Determine
allowable
itemized
deductions.
Subtract
allowable
itemized
deductions, or
standard
deduction,
from adjusted
gross income.
1-7
Steps in the Calculation Process
Determine
personal
exemption
amount that can
be claimed.
Calculate taxable
income.
Calculate tax
using
appropriate tax
rate schedule or
tax table.
Subtract tax
credits and add
additional taxes
to determine tax
liability.
1-8
Form 1040
1-9
Total Income
1-10
Adjusted Gross Income
1-11
Adjustments to Income
•
•
•
•
•
•
•
•
•
•
Qualified education (student loan) interest
Educator expense deduction (through 2014)
Tuition and fees deduction (through 2014)
IRA deductions
Keogh contributions (for business owner)
Discrimination lawsuit expenses
Penalty on early withdrawal of savings
Alimony deduction—Module 7
One-half of the self-employment tax—Module 8
Jury duty fees paid over to employer
Equals AGI: THE LINE
1-12
Individual Retirement Accounts
• Contribution limit: 100% of earned income up
•
•
to $5,500 (spousal IRAs allowed), $1,000 age
50 catch-up
No MAGI (AGI w/out the IRA) limits for
deduction if taxpayer is not active participant
Deductibility may be limited if taxpayer is
treated as active participant
o DC plan—any annual additions (employee or
employer contributions, or forfeitures)
o DB plan—eligible to participate
o More details in Retirement Planning course
1-13
IRA Deductibility
Active Participants (2015)
Single
MFJ
both
active
Full
$61,000
AGI
$71,000
AGI
None
Partial
Full
$118,000
AGI
$98,000
AGI
None
Partial
1-14
IRA Deductibility
Active Participants (2014)
Married Filing Jointly, One Spouse Active
Active
Spouse
NonActive
Spouse
Full
$98,000
AGI
$118,000
AGI
None
Partial
Full
$183,000 $193,000
AGI
AGI
None
Partial
1-15
Basic Tax Planning Techniques
• Tax Avoidance
o Use of exclusions, deductions, and credits
• Tax Deferral
o IRAs, pension plans, etc.
• Conversion
o Lower rates apply to LTCGs
• Income Shifting (discussed in Module 7)
o Allows income to be taxed at potentially lower
rates
1-16
Review Question 1
The following summarizes several financial events in the
life of James Grant during the current tax year:
o He received a $100,000 inheritance.
o He had gambling winnings of $50,000.
o He had itemized deductions of $10,000.
o He paid student loan interest of $4,200.
What is James’ total income for the current tax year?
a. $35,800
b. $40,000
c. $50,000
d. $140,000
e. $150,000
1-17
Review Question 2
Lowell and Thelma Jordan are married and will file a joint
return for the current tax year. They have provided you
with the following information:
Lowell’s salary
Thelma’s salary
Unemployment compensation
Net capital loss
Private-activity municipal bond interest
$60,000
$25,000
$10,000
$ 8,000
$ 4,200
Based on the information given, what is Lowell and
Thelma’s adjusted gross income for the current tax year?
a. $77,000
b. $91,200
c. $92,000
d. $99,200
1-18
Review Question 3
Which one of the following is not a step in the
tax calculation process?
a. Determine total income
b. Subtract adjustments to income from total
income to get adjusted gross income
c. Deduct the greater of itemized deductions or
the standard deduction from AGI
d. Determine the personal exemption amount
that can be deducted
e. Subtract credits from taxable income to
compute net tax due
1-19
Review Question 4
Mary is an active participant in an employer-sponsored
retirement plan, but her husband, Frank, is not. Their
combined AGI for 2015 is $195,000. They each
contributed $5,500 to an IRA this year.
Which one of the following statements is correct
regarding the deductibility of the IRA contributions?
a. Neither Mary nor Frank may deduct an IRA
contribution.
b. Both Frank and Mary may deduct their IRA
contributions.
c. Frank may deduct his IRA contribution, but Mary
may not deduct hers.
1-20
Review Question 5
Mildred is an active participant in an employersponsored retirement plan, but her husband, Franklin, is
not. Their combined AGI for 2015 is $125,000. They
each contributed $5,000 to an IRA this year. Which one
of the following statements is correct regarding the
deductibility of the IRA contributions?
a. Neither Mildred nor Franklin may deduct an IRA
contribution.
b. Both Franklin and Mildred may deduct their IRA
contributions.
c. Franklin may deduct his IRA contribution, but
Mildred may not deduct hers.
1-21
CERTIFIED FINANCIAL PLANNER CERTIFICATION
PROFESSIONAL EDUCATION PROGRAM
Income Tax Planning
Session 1
End of Slides
©2015, College for Financial Planning, all rights reserved.