Tax Related Issues

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Tax Related Issues




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Presentations text content in Tax Related Issues

Slide1

Tax Related Issues

Lisa Riccardi

Tax Manager, VonLehman & Company

Slide2

Agenda

Types of Reimbursement

P

lans

Common Deductions

Substantiation Requirements

Questions

Slide3

Accountable Plan

Not included in employee’s income

No deduction for expense

Requirements

Business Connection

Substantiation

Return of Excess Reimbursement

Reasonable period of time

Slide4

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

Slide5

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

Slide6

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

Slide7

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

Slide8

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

Slide9

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

Slide10

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.”

Slide11

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

Slide12

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

Slide13

Employee Expense - Uniforms

Cost and Upkeep

Condition of employment

Not suitable for everyday wear

Slide14

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

Slide15

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

Slide16

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

Slide17

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

Slide18

Work-Related Education Costs

Required by employer

Required by law

Required by government regulation

Maintain or improve skills required in performing present job

Slide19

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

Slide20

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

Slide21

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

Slide22

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

Slide23

Charitable Deduction

Unreimbursed gifts to school

Classroom supplies

Textbooks

Library books

Gym equipment

Money to assist with fundraiser or school project

Slide24

QUESTIONS & COMMENTS

Thank you !!


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