DESCRIPTION
This module introduces the different types of interest and dividend income, with a focus on core understanding and practical applications. Next, there is an exploration of capital assets and how the related gain or loss upon sale is treated on the 1040, including the sale of a personal residence. There is also an interactive exercise where participants comb through a Consolidated Form 1099 and determine where on the 1040 each item should land. Finally, the material briefly covers the Net Investment Income Tax and Kiddie Taxes before ending with an exercise that warns participants of many of the common errors made by other accountants in their positions. The learning for this module is delivered through lectures, interactive exercises, case studies, review of Tax forms, group discussion, and quizzes.
LEARNING OBJECTIVES
- Identify the primary tax forms and schedules used to report interest income, dividend income, and capital gains and losses.
- Distinguish between taxable and tax-exempt interest at the federal level, state level, both levels, or neither, based on the source of the income.
- Define a capital asset for federal income tax purposes and identify common examples relevant to individual taxpayer.
- Identify the applicable federal tax rate brackets for qualified dividends and long-term capital gains, and how they differ from ordinary income tax rates.
- Analyze a consolidated Form 1099 to locate and categorize interest, dividend, and capital gain items for proper tax reporting.
- Evaluate common preparation risks and errors related to investment income reporting that could occur when preparing an individual tax return.
