Qualifying
Income
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Gregory J. Cook, EA, CPA+ Accredited Tax Advisor Past President Alabama Society of Enrolled Agents Past President Alabama Association of Accountants |
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Qualifying Income
For those who are not required to file a 2007 federal income tax return, what constitutes “qualifying income” for meeting the “at-least-$3,000” test for economic stimulus payment purposes?
(Note that any combination of the “qualifying income” items can be used to meet the “at-least-$3,000” test.)
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Qualifying Income |
NOT Qualifying Income |
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Social Security benefits within the meaning of Section 86(d) of the Internal Revenue Code, which are: Social Security retirement benefits Social Security survivor benefits Social Security disability benefits (These are reported in Box 5 of Form SSA-1099) |
Supplemental Security Income (SSI) |
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Social Security-equivalent Railroad Retirement Board Tier I benefits (These are reported in Box 5 of Form RRB-1099)
(Note: Railroad Retirement Board Tier I benefits are included within the definition of Social Security benefits under Section 86(d) of the Internal Revenue Code.) |
Non-Social Security-equivalent Railroad Retirement Board Tier I and all Tier II benefits (These are all of the benefits reported on Form RRB-1099-R) |
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Benefits received under Chapters 11, 13, or 15 of Title 38 of the United States Code, which are: VA disability benefits VA pension benefits VA survivor benefits |
All other payments from the Department of Veterans Affairs |
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Earned income within the meaning of Section 32(c)(2), which is: Ø Wages, salaries, tips and other employee compensation, but only if such amounts are includible in gross income for the taxable year; Ø Net earnings from self-employment includible in income for the taxable year, after deducting one-half of any self-employment taxes due (IRC 32(a)(2)(A)(ii)); Ø Excludible combat zone income (IRC Section 112) received before January 1, 2009, which the taxpayer elects to treat as earned income. |
Ø Net earnings from self-employment which are not taken into account when computing taxable income. Ø Pension or annuity income (IRC 32(a)(2)(B)(ii)) Ø Income earned while an inmate at a penal institution (IRC 32(a)(2)(B)(iv)) Ø Interest Ø Dividends Ø Alimony Ø Capital Gains & F.4797 Gains Ø IRA, 401(k), 403(b) Distributions Ø F.1040 line 17 (Rents / royalties / partnerships / S-corps / trusts) may or may not be earned income – must ask more questions Ø Unemployment Compensation Ø “Welfare” benefits Ø Any other “unearned” income |
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Tax Dept
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Keeping Good Tax Records You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. Good recordkeeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience. Records help you document the deductions you’ve claimed on your return. You’ll need this documentation should the IRS select your return for examination. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return: Bills, Credit card and other receipts, Invoices, Mileage logs, Canceled, imaged or substitute checks or any other proof of payment, and ... Any other records to support deductions or credits you claim on your return. Good recordkeeping throughout the year saves you time and effort at tax time when organizing and completing your return. If you hire a paid professional to complete your return, the records you have kept will assist the preparer in quickly and accurately completing your return. |
