1 / 24

Tax Related Issues

Tax Related Issues. Lisa Riccardi Tax Manager, VonLehman & Company. Agenda. Types of Reimbursement P lans Common Deductions Substantiation Requirements Questions. Accountable Plan. Not included in employee’s income No deduction for expense Requirements Business Connection

Download Presentation

Tax Related Issues

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.


Presentation Transcript

  1. Tax Related Issues Lisa Riccardi Tax Manager, VonLehman & Company

  2. Agenda • Types of Reimbursement Plans • Common Deductions • Substantiation Requirements • Questions

  3. Accountable Plan • Not included in employee’s income • No deduction for expense • Requirements • Business Connection • Substantiation • Return of Excess Reimbursement • Reasonable period of time

  4. Nonaccountable Plan • Treated as taxable wages • Reported on W-2 • Employee can utilize Form 2106 (discussed later) • Cannot convert payments • Half & Half • Each treated separately

  5. Common Deductions - Supplies • Eligible Educator • Kindergarten through grade 12 • Work 900 hours • $250 maximum deduction • Above the line • Various supplies qualify • Health & Physical Education • Must be related to athletics

  6. Continuing Education Credit • Lifetime Learning Credit • Unreimbursed tuitions and fees • Graduate classes apply • Up to $2,000 • Unlimited number of years • AGI phase-out • $107,000-$127,000 MFJ • $53,000-$63,000 Single

  7. Tuition & Fees Deduction • Above the line deduction • Tuition and fees includes books, supplies, and equipment • Undergraduate and graduate • Not allowed if expenses are deducted under another provision • Up to $4,000 qualifying expenses, depending on income

  8. Employee Business Expenses • Reported on Form 2106 • Itemized Deduction (Below the Line) • Subject to 2% of Adjusted Gross Income (AGI) • Why File? • Unreimbursed Job Related Cost – travel, meals, transportation, vehicle, entertainment • Expenses in excess of employer reimbursements

  9. Do you need a Form 2106? • No reimbursements by employer or reimbursement equals expense • Only expenses except for: • Vehicle • Travel • Transportation • M&E • Directly on Line 21 Schedule A • 2% AGI Limitation

  10. What is a Deductible Business Expense? • IRS has no specific list “All ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business are deductible. An ordinary expense is one that is common and accepted in a particular field of business, trade, or profession. A necessary expense is one that is helpful and appropriate for a particular business, trade, or profession.”

  11. Employee Expense - Meals • Directly related • Main purpose business related • Not lavish or extravagant • Limited to 50% of expense • Exceptions • De Minimis fringe benefits • Treated as taxable compensation • Employer provided

  12. Employee Expense -Travel • Transportation and Lodging • Must be away from tax home • Time away determination • Longer than ordinary work day • Rest or sleep • 100% deductible

  13. Employee Expense - Uniforms • Cost and Upkeep • Condition of employment • Not suitable for everyday wear

  14. Employee Expense - Vehicle • Two methods to calculation deduction • Standard mileage • Actual expenses • Necessary Information • Total miles driven for year • Total business miles for year • Date placed in service

  15. Employee Expense - Vehicle • Only deduct business portion of expenses • Need substantiation • Amount of each expense (receipts) • Track mileage (log) • Date of each expense • Standard mileage rate for 2014 • 56.5 cents per mile

  16. Employer Provider Vehicle • Fringe benefit -taxable depending on use • Tax free • 100% for business • De minimis use – personal use too small to account for • Written policy against personal use

  17. Commuting Expenses • Commute between home and work location not deductible • Deductible if commute is between: • Home and temporary work location outside metro area • One or more regular work locations away from home, in same trade or business

  18. Work-Related Education Costs • Required by employer • Required by law • Required by government regulation • Maintain or improve skills required in performing present job

  19. Work-Related Education Costs • Even if standards met cannot deduct cost to: • Help return to a job, business, or profession • Meet minimal requirements for a trade or business • Qualify for a new job, trade or business

  20. Deductible Education Expenses • Tuition, textbooks, registration fees and supplies • Transportation • Meals & lodging while attending school away from home • Writing expenses for term papers or dissertations

  21. Teachers’ Education Expenses • All ordinary and necessary expenses incurred to: • Meet employer’s or state requirements for keeping salary, job status or employment • Maintain or improve job skills • Become licensed in another state

  22. Teachers’ Education Expenses • Change positions or duties within the teaching field • Elementary to secondary teacher • Teacher in one subject to another subject • Teacher to counselor or school administrator • Additional college courses even if lead to higher degree or salary • Sabbatical or leave of absence

  23. Charitable Deduction • Unreimbursed gifts to school • Classroom supplies • Textbooks • Library books • Gym equipment • Money to assist with fundraiser or school project

  24. QUESTIONS & COMMENTS Thank you !!

More Related