OBBBA

Question 1

What is the purpose of the Alternative Minimum Tax (AMT)?

Answer 1

To ensure taxpayers with significant deductions pay a minimum level of tax.

Question 2

Under OBBBA, what happened to AMT exemption thresholds?

Answer 2

They were increased.

Question 3

Under OBBBA, what happened to the AMT exemption phaseout rate?

Answer 3

It increased from 25% to 50%.

Question 4

What does a 50% AMT phaseout rate mean?

Answer 4

The exemption is reduced by $0.50 for every $1 above the phaseout threshold.

Question 5

What is the AMT exemption phaseout threshold for single filers under OBBBA?

Answer 5

500000

Question 6

What is the AMT exemption phaseout threshold for married filing jointly under OBBBA?

Answer 6

1000000

Question 7

What type of income event commonly triggers AMT exposure?

Answer 7

Exercising Incentive Stock Options (ISOs).

Question 8

What is the SALT deduction?

Answer 8

A deduction for state and local taxes paid, including property and income taxes.

Question 9

What taxes are included in SALT deductions?

Answer 9

State income taxes, state sales taxes, and property taxes.

Question 10

What was the SALT deduction cap under the Tax Cuts and Jobs Act?

Answer 10

10000

Question 11

What is the SALT deduction cap under OBBBA?

Answer 11

40000

Question 12

Who benefits most from the increased SALT deduction cap?

Answer 12

Taxpayers in high-tax states.

Question 13

Why does the SALT deduction only matter if a taxpayer itemizes deductions?

Answer 13

Because the standard deduction replaces itemized deductions if it is larger.

Question 14

What planning consideration arises from the increased SALT cap?

Answer 14

More taxpayers may benefit from itemizing deductions again.

Question 15

What is the federal estate tax exemption under recent tax law changes?

Answer 15

It remains historically high and indexed for inflation.

Question 16

What planning focus becomes more important when estate tax exemptions are very high?

Answer 16

Income tax planning.

Question 17

What is one major estate planning strategy that becomes more relevant when estate taxes affect fewer taxpayers?

Answer 17

Basis step-up planning.

Question 18

What is the tax treatment of contributions to a 529 plan?

Answer 18

Contributions are made with after-tax dollars.

Question 19

What is the tax treatment of earnings inside a 529 plan?

Answer 19

Earnings grow tax-deferred.

Question 20

What is the tax treatment of qualified 529 withdrawals?

Answer 20

Withdrawals are tax-free.

Question 21

What education expenses are traditionally considered qualified for 529 plans?

Answer 21

Tuition, books, fees, and certain room and board expenses.

Question 22

Under current rules, how much 529 money can be used to repay student loans?

Answer 22

Up to $10,000 lifetime per beneficiary.

Question 23

What rule prevents taxpayers from using the same education expense for multiple tax benefits?

Answer 23

The no double-dipping rule.

Question 24

What is double dipping in education tax planning?

Answer 24

Using the same education expense for both a tax credit and a tax-free 529 withdrawal.

Question 25

What education tax credit is commonly coordinated with 529 withdrawals?

Answer 25

The American Opportunity Credit (AOC).

Question 26

What happens if a 529 withdrawal is non-qualified?

Answer 26

Earnings are taxed and generally subject to a 10% penalty.

Question 27

What exception removes the 10% penalty for non-qualified 529 withdrawals?

Answer 27

When the beneficiary receives a scholarship.

Question 28

When the scholarship exception applies to a 529 withdrawal, what still happens to the earnings portion?

Answer 28

The earnings portion is still taxable as ordinary income.

Question 29

What planning option allows families to preserve tax benefits when a student receives a scholarship?

Answer 29

Change the 529 beneficiary to another family member.

Question 30

What is the primary goal of expanding qualified uses of 529 plans?

Answer 30

To support vocational, trade, and credentialing programs.

Question 31

What is the minimum age required to make catch-up contributions to retirement plans?

Answer 31

Age 50.

Question 32

What is the purpose of catch-up contributions?

Answer 32

To allow older workers to increase retirement savings as they approach retirement.

Question 33

What types of retirement plans allow catch-up contributions?

Answer 33

Plans such as 401(k), 403(b), and IRAs.

Question 34

What policy goal drives incentives for employers to create retirement plans?

Answer 34

Expanding access to workplace retirement plans.

Question 35

Why are employer retirement plans important for retirement security?

Answer 35

They increase participation and savings rates.

Question 36

What is a Health Savings Account (HSA)?

Answer 36

A tax-advantaged account used to pay qualified medical expenses.

Question 37

What three tax advantages make HSAs unique?

Answer 37

Tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Question 38

What phrase is commonly used to describe the tax advantages of HSAs?

Answer 38

Triple tax advantage.

Question 39

Why are HSAs sometimes considered a stealth retirement account?

Answer 39

Because unused funds can grow tax-free for future medical expenses in retirement.

Question 40

What is the AGI threshold for deducting medical expenses?

Answer 40

Medical expenses exceeding 7.5% of AGI are deductible.

Question 41

If medical expenses are below 7.5% of AGI, what happens?

Answer 41

They are not deductible.

Question 42

What must taxpayers do to deduct medical expenses?

Answer 42

Itemize deductions.

Question 43

Why has income tax planning become more important than estate tax planning for many households?

Answer 43

Because estate tax exemptions are historically high.