Income Types and Reporting Flashcards

A taxpayer wins $5,000 at a casino. How should this be reported?

Answer: As Other Income on Schedule 1

All gambling winnings are taxable and must be reported as Other Income on Schedule 1, regardless of whether a Form W-2G was issued.

Alimony paid under a divorce agreement finalized in 2019 is treated how for the payer?

Answer: Deductible as an adjustment to income

Alimony under pre-2019 (pre-TCJA) divorce agreements is deductible by the payer and taxable to the recipient under the old rules.

Which form is used to report interest income of $1,500 from a bank account?

Answer: Schedule B

Schedule B is required when taxable interest or ordinary dividends exceed $1,500, and it reconciles interest and dividend income.

A taxpayer receives a state tax refund. Under what condition is the refund taxable?

Answer: If the taxpayer itemized and deducted state taxes in the prior year

A state tax refund is taxable only to the extent the taxpayer received a tax benefit from deducting state taxes in the prior year (the tax benefit rule).

Which IRS form reports distributions from a traditional IRA or 401(k)?

Answer: Form 1099-R

Form 1099-R reports distributions from pensions, annuities, retirement plans, and IRAs.

An employee is reimbursed $600 under an employer's accountable plan for business travel. How is this treated?

Answer: Excluded from taxable income

Reimbursements under an accountable plan are excluded from the employee's taxable income because the employee substantiated the business expense.