Thursday, December 22, 2011
Funny But Informative CPR/Basic Life Support Training Video - 2010 AHA Guidelines
Check out this CPR/Basic Life Support for Health Care Providers training video. It's a HOOT!!
Wednesday, December 7, 2011
HOW TO REPAIR YOUR INTERNET CONNECTION ON YOUR PALM TREO OR CENTRO
By JC Leahy
My Palm 755p wouldn't connect to the Internet for several weeks from any location. I kept getting the message that there was an "error" loading any internet site. I also was unable to send or receive e-mail from the phone. I called Sprint and learned how to "restore Vision services" to reset the Internet connectivity. It worked.
Here's the procedure:
Got to the telephone dialing screen.
Press the code ##3282# . This is called the "data restore code." (It also accesses the menu to unlock you phone.)
Select "Data" at the top left corner of the screen."
Select "Vision Services"
Follow the prompts to "restore Vision services"
That should do it. You can verify Internet connectivity by looking for the little letters "EV" next to the signal-strength-bar icon on your phone. If "EV" is displayed, you have Internet connectivity. Apparently, though, not all Treo's display the "EV" symbol, because my 755p displays no "EV" even though it is now able to access the Internet and send/receive e-mail just fine.
If this procedure doesn't work, your phone will have to be hard-rebooted. This will destroy all data on it but it will also fix your Internet connection. If you call Sprint, they can set up an electronic work order for a Sprint store to back up your phone, hard-reboot it, and restore all your data.
Here's the procedure:
Got to the telephone dialing screen.
Press the code ##3282# . This is called the "data restore code." (It also accesses the menu to unlock you phone.)
Select "Data" at the top left corner of the screen."
Select "Vision Services"
Follow the prompts to "restore Vision services"
That should do it. You can verify Internet connectivity by looking for the little letters "EV" next to the signal-strength-bar icon on your phone. If "EV" is displayed, you have Internet connectivity. Apparently, though, not all Treo's display the "EV" symbol, because my 755p displays no "EV" even though it is now able to access the Internet and send/receive e-mail just fine.
If this procedure doesn't work, your phone will have to be hard-rebooted. This will destroy all data on it but it will also fix your Internet connection. If you call Sprint, they can set up an electronic work order for a Sprint store to back up your phone, hard-reboot it, and restore all your data.
Wednesday, November 16, 2011
TAX PLANNING QUESTION: CAN I DEDUCT MILEAGE TO GAMES I REFEREE ??
By JC Leahy
Twitter@jc_leahy
TAX QUESTION, FROM MIKE, IN BOWIE, MARYLAND: As a paid sports referee, what mileage can I deduct when traveling to referee a basket ball game? Can I count the mileage from home to game site and from the game site back to home?
ANSWER: Mike, you are refereeing games as a regular, paid activity. You are paid on a 1099-basis You are, in fact, conducting a small business, and the basketball sites are, in fact, your client work sites. I know from our conversations that there is no out-of-town overnight travel involved. You drive from home to the basketball courts and back.
As a rule, when you use your personal automobile to drive to a business site, or between business sites, or to run business errands of any sort -- you are entitled to deduct automobile costs at the IRS-designated mileage rate. The exception to this rule is commuting. Commuting is travel from home to and from a place of regular employment or business. Commuting miles are personal expenses and are not tax deductible. If you regularly referee at several athletic facilities and you drive from home, the mileage would probably be classified as nondeductible commuting. All other business mileage EXCEPT commuting is deductible. This includes mileage for referee-related business errands of any kind as well as mileage for transportation between any business or client locations.
For your home office to "qualify", it must be your "principle place of business." Ever since the aftermath of the Solomon Case in the early 1990's, it has been much easier for a home office "qualify" as your principle place of business. If any one of these 3 tests is true, your office is your principle place of business:
For documentation, you'll need a contemporaneous log of your mileage, and also some sort of written log or evidence about the before-and-after business use of your home office.
Here's material for further reading:
Small Business Mileage Deductions
Any further questions, of course, let me know!
JC Leahy, MA Accounting
Twitter@jc_leahy
 |
| JC Leahy |
ANSWER: Mike, you are refereeing games as a regular, paid activity. You are paid on a 1099-basis You are, in fact, conducting a small business, and the basketball sites are, in fact, your client work sites. I know from our conversations that there is no out-of-town overnight travel involved. You drive from home to the basketball courts and back.
As a rule, when you use your personal automobile to drive to a business site, or between business sites, or to run business errands of any sort -- you are entitled to deduct automobile costs at the IRS-designated mileage rate. The exception to this rule is commuting. Commuting is travel from home to and from a place of regular employment or business. Commuting miles are personal expenses and are not tax deductible. If you regularly referee at several athletic facilities and you drive from home, the mileage would probably be classified as nondeductible commuting. All other business mileage EXCEPT commuting is deductible. This includes mileage for referee-related business errands of any kind as well as mileage for transportation between any business or client locations.
One way to optimize your mileage deductions would be to have a tax-qualified home office for your referee business, and to engage in business related activities in your home office before and after each trip to an athletic facility. That way, when you get in your car, you are not driving from/to HOME; you are driving from/to YOUR OFFICE -- to a game. That's deductible.
For your home office to "qualify", it must be your "principle place of business." Ever since the aftermath of the Solomon Case in the early 1990's, it has been much easier for a home office "qualify" as your principle place of business. If any one of these 3 tests is true, your office is your principle place of business:
- The primary value of your business is delivered in the home office, or
- You regularly meet with customers or prospects in the home office, or
- The primary management or administration of your business is conducted in the home office.
For documentation, you'll need a contemporaneous log of your mileage, and also some sort of written log or evidence about the before-and-after business use of your home office.
Here's material for further reading:
Small Business Mileage Deductions
Any further questions, of course, let me know!
JC Leahy, MA Accounting
Sunday, November 13, 2011
GAMES THEY PLAY WITH SOCIAL SECURITY
Question by Bill of Silver Spring, Maryland
Answer by JC Leahy, MA Accounting
Twitter@jc_leahy
Question:
I am receiving Social Security retirement benefits, but I also have to work for extra money to make ends meet. I am a self employed full-time painting contractor. Business has been really tough these past couple of years. Last year, despite my full-time efforts, I made a net of zero at the painting business. This year, so far I have a net $70,000. This income won't reduce my monthly Social Security check, will it?
Answer:
Bill, Congress has made our Social Security benefits into an unfortunate shell game. I won't tax your interest with all the details -- but here are the scraps that relate to your specific retirement planning question.
If you work after you start to receive Social Security benefits, your Social Security benefits may be reduced because of your employment or self-employment income. This only affects you if you are receiving early Social Security retirement benefits. If you have reached your "full" retirement age, your benefits are NOT reduced as a result of other income. Early retirement age is 62. Your full retirement age depends on how young you are..
To determine your full retirement age according to the SSA, look for your birth year in this list
• 1937 or earlier: 65
• 1938: 65 + 2 months
• 1939: 65 + 4 months
• 1940: 65 + 6 months
• 1941: 65 + 8 months
• 1942: 65 + 10 months
• 1943-1954: 66
• 1955: 66 + 2 months
• 1956: 66 + 4 months
• 1957: 66 + 6 months
• 1958: 66 + 8 months
• 1959: 66 + 10 months
• 1960 or later: 67
For example, Bill, based on the above table your full retirement age is 65 years and 2 months because you were born in 1938. Your current age is 71. Since you are older than your full-benefits retirement age, your Social Security benefit will NOT be reduced because of your self employment earnings.
If you were, say 62, not only would you get a reduced Social Security benefit, but that reduced benefit would be FURTHER reduced by $1 for every $2 of income you made in excess of $14,160 annually. So, if you had a net of $70,000 from your painting business, your Social Security benefit would be reduced by ($70,000 - $14160) x 0.5 = $27,920 REDUCTION. In your case, Bill, $27,920 subtracted from your annual Social Security benefit would leave you a remaining Social Security retirement monthly check of approximately zero. It's a lucky thing they don't count negative numbers in that calculation, because if they did, Congress would want YOU to send THEM a check!! LOL!!!
Oh! Wait a minute!! Au sérieux! You might actually have to send Congress a check -- even if you ARE over the full retirement age. No kidding!! Here's how it works. If you earn wages, salary, self employment income or any other kind of income while you are receiving Social Security -- Uncle Sam may want you to send some of that Social Security money back in the form of income tax .
Paying income tax on Social Security retirement benefits DOES seem unfair. After all, every payday for your entire working life you paid FULL Federal income tax, state income tax, and various payroll taxes on EVERY DIME of Social Security once already. To tax you again when you take the money back out of Social Security is to tax you TWICE!!!! But that's the way the system works. Originally, back in the New Deal era, all Social Security retirement benefits were exempt from this double-taxation but Congress just couldn't resist the temptation to change that. You might call this the Raw Deal.
It's definitley a bad investment. Experts often say that your investment in Social Security is one of the least attractive investments you will ever make -- and when you delve into the details, it's not hard to see why.
So it's good-news and bad news for you, Bill. You are old enough so that your monthly Social Security check will not be reduced. You will, however, face double-taxation of some of your Social Security benefits.
I hope this helps. If you need more information, give me a call or enter a "comment" below.
(Question to young folks: So you think your Roth IRA benefits are going to be tax-free when you retire? Hmmmm....)
Answer by JC Leahy, MA Accounting
Twitter@jc_leahy
Question:
I am receiving Social Security retirement benefits, but I also have to work for extra money to make ends meet. I am a self employed full-time painting contractor. Business has been really tough these past couple of years. Last year, despite my full-time efforts, I made a net of zero at the painting business. This year, so far I have a net $70,000. This income won't reduce my monthly Social Security check, will it?
Answer:
Bill, Congress has made our Social Security benefits into an unfortunate shell game. I won't tax your interest with all the details -- but here are the scraps that relate to your specific retirement planning question.
If you work after you start to receive Social Security benefits, your Social Security benefits may be reduced because of your employment or self-employment income. This only affects you if you are receiving early Social Security retirement benefits. If you have reached your "full" retirement age, your benefits are NOT reduced as a result of other income. Early retirement age is 62. Your full retirement age depends on how young you are..
To determine your full retirement age according to the SSA, look for your birth year in this list
• 1937 or earlier: 65
• 1938: 65 + 2 months
• 1939: 65 + 4 months
• 1940: 65 + 6 months
• 1941: 65 + 8 months
• 1942: 65 + 10 months
• 1943-1954: 66
• 1955: 66 + 2 months
• 1956: 66 + 4 months
• 1957: 66 + 6 months
• 1958: 66 + 8 months
• 1959: 66 + 10 months
• 1960 or later: 67
For example, Bill, based on the above table your full retirement age is 65 years and 2 months because you were born in 1938. Your current age is 71. Since you are older than your full-benefits retirement age, your Social Security benefit will NOT be reduced because of your self employment earnings.
If you were, say 62, not only would you get a reduced Social Security benefit, but that reduced benefit would be FURTHER reduced by $1 for every $2 of income you made in excess of $14,160 annually. So, if you had a net of $70,000 from your painting business, your Social Security benefit would be reduced by ($70,000 - $14160) x 0.5 = $27,920 REDUCTION. In your case, Bill, $27,920 subtracted from your annual Social Security benefit would leave you a remaining Social Security retirement monthly check of approximately zero. It's a lucky thing they don't count negative numbers in that calculation, because if they did, Congress would want YOU to send THEM a check!! LOL!!!
Oh! Wait a minute!! Au sérieux! You might actually have to send Congress a check -- even if you ARE over the full retirement age. No kidding!! Here's how it works. If you earn wages, salary, self employment income or any other kind of income while you are receiving Social Security -- Uncle Sam may want you to send some of that Social Security money back in the form of income tax .
Paying income tax on Social Security retirement benefits DOES seem unfair. After all, every payday for your entire working life you paid FULL Federal income tax, state income tax, and various payroll taxes on EVERY DIME of Social Security once already. To tax you again when you take the money back out of Social Security is to tax you TWICE!!!! But that's the way the system works. Originally, back in the New Deal era, all Social Security retirement benefits were exempt from this double-taxation but Congress just couldn't resist the temptation to change that. You might call this the Raw Deal.
It's definitley a bad investment. Experts often say that your investment in Social Security is one of the least attractive investments you will ever make -- and when you delve into the details, it's not hard to see why.
So it's good-news and bad news for you, Bill. You are old enough so that your monthly Social Security check will not be reduced. You will, however, face double-taxation of some of your Social Security benefits.
I hope this helps. If you need more information, give me a call or enter a "comment" below.
(Question to young folks: So you think your Roth IRA benefits are going to be tax-free when you retire? Hmmmm....)
Sunday, November 6, 2011
How to Obtain a Transcript of your Federal Income Tax Return
By JC Leahy, MA, Accounting
Twitter@JC_Leahy
In this case, the transcript was required the Department of Homeland Security U.S. Citizenship and Immigration Services. My client had filed a Petition to Remove Conditions on Residence (Form I-751) for his wife. The Immigration Service was demanding that he show proof that his marriage was not a sham "entered into in order to evade U.S. Immigration laws." Immigration demanded an "official transcript" from the IRS of one or more joint income tax returns.
His question for me was: "What the heck is a tax return official transcript and how can I get one." An official transcript from the IRS can be obtained free by filing a Form 4506-T, Request for Transcript of Tax Return.. It's a free service. Form 4506-T is pretty straightforward. Just make sure you tell them on line 6 what form you want a copy of. Be sure, also, to tell them on line 8 which years' tax returns you want. Here's a link to print a copy of Form 4506-T with instructions:
DOWNLOAD FORM 4506-T, REQUEST FOR TRANSCRIPT OF TAX RETURN
The problem with using Form 4506-T is that is takes considerable time to process. You can speed up the process by using the telephone. Simply call the IRS at 800-908-9946 and make your request verbally. If you are near a FAX machine, they will FAX you your transcript while you wait. In that case, be sure not to call them on the same phone line that the FAX uses.
There is a very similar form in case you need a copy of a tax return with all it's attachments. This if Form 4506 "Request for Copy of Tax Return". It sounds similar, and the form is very similar, but this one costs you a fee of $57 per tax return. A complete copy will show the details of all the attachments to your tax return while a transcript does not. Here's a link to print a copy of Form 4506-T with instructions:
DOWNLOAD FORM 4506, REQUEST FOR COPY OF TAX RETURN
There are all sorts of reasons why you might need a copy of your tax return or even an "official transcript." For example, mortgage loan applications, job applications, security clearance applications. You might want to bookmark this article, just for future reference.
Comments or questions? Enter them as a "comment" to this article.
ADDENDUM:
District of Columbia Tax Contact Telephone Numbers
Maryland Tax Contact Telephone Numbers
Pennsylvania Tax Contact Telephone Numbers
Virginia Tax Contact Telephone Numbers
Contact Data:
JC Leahy, MA, Accounting
JC Leahy and Company, LLC
dba Maximul Legal Refund (TM)
Income Tax Help When You Need It! (TM)
Silver Spring, Maryland
Tel. (301)537-5365
E-Mail jcleahy@taxhelpwhenyouneedit.com
Twitter@JC_Leahy
His question for me was: "What the heck is a tax return official transcript and how can I get one." An official transcript from the IRS can be obtained free by filing a Form 4506-T, Request for Transcript of Tax Return.. It's a free service. Form 4506-T is pretty straightforward. Just make sure you tell them on line 6 what form you want a copy of. Be sure, also, to tell them on line 8 which years' tax returns you want. Here's a link to print a copy of Form 4506-T with instructions:
DOWNLOAD FORM 4506-T, REQUEST FOR TRANSCRIPT OF TAX RETURN
The problem with using Form 4506-T is that is takes considerable time to process. You can speed up the process by using the telephone. Simply call the IRS at 800-908-9946 and make your request verbally. If you are near a FAX machine, they will FAX you your transcript while you wait. In that case, be sure not to call them on the same phone line that the FAX uses.
There is a very similar form in case you need a copy of a tax return with all it's attachments. This if Form 4506 "Request for Copy of Tax Return". It sounds similar, and the form is very similar, but this one costs you a fee of $57 per tax return. A complete copy will show the details of all the attachments to your tax return while a transcript does not. Here's a link to print a copy of Form 4506-T with instructions:
DOWNLOAD FORM 4506, REQUEST FOR COPY OF TAX RETURN
There are all sorts of reasons why you might need a copy of your tax return or even an "official transcript." For example, mortgage loan applications, job applications, security clearance applications. You might want to bookmark this article, just for future reference.
Comments or questions? Enter them as a "comment" to this article.
ADDENDUM:
District of Columbia Tax Contact Telephone Numbers
Maryland Tax Contact Telephone Numbers
Pennsylvania Tax Contact Telephone Numbers
Virginia Tax Contact Telephone Numbers
Contact Data:
JC Leahy, MA, Accounting
JC Leahy and Company, LLC
dba Maximul Legal Refund (TM)
Income Tax Help When You Need It! (TM)
Silver Spring, Maryland
Tel. (301)537-5365
E-Mail jcleahy@taxhelpwhenyouneedit.com
TAX PLANNING: RAFFLE AND CONTEST TICKETS AS TAX DEDUCTIONS
By JC Leahy
TaxHelpWhenYouNeedIt.com
Income Tax Preparation & Consulting
jcleahy@taxhelpwhenyouneedit.com
If I buy raffle tickets from a charitable or educational organization, how much is deductible on my income tax return? For example, what if I buy a raffle ticket from my child's school? How much of that is deductible as a charitable contribution?
The general rule is that if you give something to a tax exempt organization and receive something in return, you must subtract the value of what you received, to determine the amount of your charitable contribution. For example, if you give a charity $10 for a box of candy which normally sells for $8, then only $2 is deductible as a charitable contribution: $10 minus $8. In the case of a raffle ticket, when you buy the ticket, you get something in return - a chance to win the prize. In the IRS's eyes, the value of the CHANCE to win the prize is always WORTH THE PRICE you pay for the raffle ticket; therefore, NOTHING is deductible. So if you buy a $10 raffle ticket from you child's school, zero is deductible: $10 minus $10 equals zero.
The exception occurs if you pay money to a tax exempt organization and then get a raffle ticket free. For example, you might pay $200 regular annual dues to a tax exempt organization and the organization might send you a raffle ticket free of charge. Since you paid nothing for the raffle ticket, EVERYTHING you paid to the charitable organization is deductible. In the example, the full $200 is deductible.
So the answer is: Everything, nothing, or somewhere-in-between, depending on the situation..
TaxHelpWhenYouNeedIt.com
Income Tax Preparation & Consulting
jcleahy@taxhelpwhenyouneedit.com
If I buy raffle tickets from a charitable or educational organization, how much is deductible on my income tax return? For example, what if I buy a raffle ticket from my child's school? How much of that is deductible as a charitable contribution?
The general rule is that if you give something to a tax exempt organization and receive something in return, you must subtract the value of what you received, to determine the amount of your charitable contribution. For example, if you give a charity $10 for a box of candy which normally sells for $8, then only $2 is deductible as a charitable contribution: $10 minus $8. In the case of a raffle ticket, when you buy the ticket, you get something in return - a chance to win the prize. In the IRS's eyes, the value of the CHANCE to win the prize is always WORTH THE PRICE you pay for the raffle ticket; therefore, NOTHING is deductible. So if you buy a $10 raffle ticket from you child's school, zero is deductible: $10 minus $10 equals zero.
The exception occurs if you pay money to a tax exempt organization and then get a raffle ticket free. For example, you might pay $200 regular annual dues to a tax exempt organization and the organization might send you a raffle ticket free of charge. Since you paid nothing for the raffle ticket, EVERYTHING you paid to the charitable organization is deductible. In the example, the full $200 is deductible.
So the answer is: Everything, nothing, or somewhere-in-between, depending on the situation..
Friday, October 28, 2011
HOW TO CHANGE YOUR HOME PAGE IN FIREFOX OR EXPLORER
By JC Leahy
Firefox
Your home page is the page that appears automatically when you start your browser. My Firefox's default home page is AOL. Now that AOL has merged with the hateful-extreme-ultra-liberal Huffington Post, I wanted to change to a different website for my home page. Accomplishing this change is very simple. I decided to make my blog my new home page, at http://jcleahy.blogspot.com/ . Here's how:
That's it!!! Finished!!!!!!! It's as simple as steps 1-2-3, literally.
There is one variation you might find useful. Before you perform the 3 above steps, , GO to the website that you want as your new home page. Then, instead of typing in the address in the Options Window, just select "Use Current Page."
Microsoft Internet Explorer
If you have Internet Explorer, changing your home page is just as simple. Here are the steps:
Support This Blog At No Cost To You !!!!!!!!!
Here's how to support this blog at no cost to you: Change your browser's home page to http://jcleahy.blogspot.com/ .(as outlined above). Then, whenever you want to go to Amazon for shopping, enter the Amazon website by clicking on any of the Amazon advertisements located within blog articles or at the bottom of each page in the blog. If you do this prior anything you buy from Amazon will result in a commission being paid to this blog -- at no cost to you. Even if your Amazon shopping cart is already full, just re-enter the Amazon website through this blog before checkout and the commission will apply to everything in your Amazon shopping cart. Thank you!
Firefox
Your home page is the page that appears automatically when you start your browser. My Firefox's default home page is AOL. Now that AOL has merged with the hateful-extreme-ultra-liberal Huffington Post, I wanted to change to a different website for my home page. Accomplishing this change is very simple. I decided to make my blog my new home page, at http://jcleahy.blogspot.com/ . Here's how:
- From the Menu Bar at the very top of the screen, select "Tools"
- From the Tools drop-down menu, select "Options"
- In the "Home Page" space of the Options Window, just replace the address there with the address you want -- in this case http://jcleahy.blogspot.com/
- Click "OK" at the bottom of the Options Window.
That's it!!! Finished!!!!!!! It's as simple as steps 1-2-3, literally.
There is one variation you might find useful. Before you perform the 3 above steps, , GO to the website that you want as your new home page. Then, instead of typing in the address in the Options Window, just select "Use Current Page."
Microsoft Internet Explorer
If you have Internet Explorer, changing your home page is just as simple. Here are the steps:
- With Internet Explorer open, from the Menu Bar at the very top of the screen, select "Tools." This will bring up the Tools drop-down menu.
- In the the drop-down Tools menu, choose Internet Options. This will bring up the Internet Options window. Make sure you're on the "General" tab.
- In the Internet Options window, simply replace the displayed web address with the address you desire -- in this case http://jcleahy.blogspot.com/
- Click "Apply," then click "OK" at the bottom of the Internet Options window.
Support This Blog At No Cost To You !!!!!!!!!
Here's how to support this blog at no cost to you: Change your browser's home page to http://jcleahy.blogspot.com/ .(as outlined above). Then, whenever you want to go to Amazon for shopping, enter the Amazon website by clicking on any of the Amazon advertisements located within blog articles or at the bottom of each page in the blog. If you do this prior anything you buy from Amazon will result in a commission being paid to this blog -- at no cost to you. Even if your Amazon shopping cart is already full, just re-enter the Amazon website through this blog before checkout and the commission will apply to everything in your Amazon shopping cart. Thank you!
TAX PLANNING: DEDUCTION FOR TRAVEL EXPENSES WHILE ON TEMPORARY ASSIGNMENT
JC Leahy, MA Accounting
TaxHelpWhenYouNeedIt.com
Question from Janice in Chicago:
JC, I read this is taxable, so my question is: I am taking a post-doctoral Fellowship in Washington, DC that pays 94 K and an additional 12,000.00 for housing relocation for a 14 month period. The place I am thinking about renting is 1550 per month almost the same as my mortgage. (Yikes) Will I get a tax break by paying to live in both DC and Chicago? The rent in Dc is unbelievable! No longer will I be making 119/year
Answer:
Hi Janice! I tried calling your home phone but missed you, so here's your answer. Even though you view it as a scholarship, your fellowship, is (1) post-doctoral and (2) requires you to perform services. For both of these reasons, it, indeed, is taxable.
The next question is whether or not your out-of-town expenses are deductible. Generally, if you are away from home for a temporary period of time on business, your expenses for travel meals and lodging are deductible. That is the general rule, but the details can be problematic. The key phrases are "away from home" and "temporary period."
Let's talk about the "away from home" part. To be away from home, you must have a home from which to be away. This is called your "tax home." If you don't have a "tax home" then your home is where you hang your hat. In that event, the IRS views you as an itinerant. Itinerants' travel expenses are not deductible. Your tax home is where you live on a permanent basis and either own or rent. It must continue to be your home while you are away. For example, if you were a young person still living free-of-charge with your parents and you got a temporary out-of-town assignment, your parents' home would not qualify as your tax home because you would not have the burden of rent and other upkeep during your absence. Therefore, your travel expenses would not be deductible. For another example, suppose you owned your home and took a temporary out-of-town assignment and you decided to rent your home out during your absence. In this case, your house does not qualify as your tax home because you have rented it to be a home to someone else. In your case, you have a home in Chicago and I surmise that you are going to keep it there unrented, available to you while you are gone. So your situation in that regard is compatible with having deductible travel expenses.
The next key requirement is that you be away for a temporary assignment. This must be far enough from your tax home to require you to obtain lodging and sleep. Your 14-month assignment several hundred miles away from Chicago certainly meets that test. Your assignment must also be for a definite period. If the period is indefinite, it is not a temporary assignment for tax purposes. Your fellowship is for a definite period, which is good. However, the general rule is that a temporary travel assignment is not temporary if it lasts longer than a year. This seems like an arbitrary rule, but it is a rule, nevertheless. If you could obtain a 12-month assignment, that would be great. If it must be for 14 months, just make sure that the 14-month limit is clearly stated in writing. Then we could ask for a determination from the IRS -- or we could just run with it and hope for the best. After all, your assignment is truly temporary. I would recommend asking for an IRS determination
You are going to receive a separate housing relocation stipend as part of your 14-month compensation package. If your employer thinks this is a non taxable stipend, it will appear on your W-2 in box 12 with a code of "L". When taking deductions, you generally are not allowed to pay for a tax deduction with tax-free money. This would be a double tax break. Therefore, I believe that your travel costs, including meals, transport, and lodging, would only be deductible to the extent that they add up to more than your tax-free housing stipend. In other words, If you have $15,000 of travel costs and a $12,000 stipend, $3,000 is deductible. The stipend in this way would be counted like a reimbursement of travel expenses.
Some caveats: Meals cannot be extraordinary in amount. Also, if you decide to go back and visit Chicago (your tax home) every now and then during your temporary assignment, those costs are personal, not deductible. Finally, clarify with your temporary employer whether they will give you a W-2 or a 1099. I have known some educational institutions to issue 1099's. If you get a 1099, you will have to worry about paying self employment taxes.
I hope this helps, Janice! Let me know if there is anything else I can tell you!
JC Leahy, MA Accounting
TaxHelpWhenYouNeedIt.com (tm)
Tel.301-537-5365
TaxHelpWhenYouNeedIt.com
Question from Janice in Chicago:
 |
| JC |
Answer:
Hi Janice! I tried calling your home phone but missed you, so here's your answer. Even though you view it as a scholarship, your fellowship, is (1) post-doctoral and (2) requires you to perform services. For both of these reasons, it, indeed, is taxable.
The next question is whether or not your out-of-town expenses are deductible. Generally, if you are away from home for a temporary period of time on business, your expenses for travel meals and lodging are deductible. That is the general rule, but the details can be problematic. The key phrases are "away from home" and "temporary period."
Let's talk about the "away from home" part. To be away from home, you must have a home from which to be away. This is called your "tax home." If you don't have a "tax home" then your home is where you hang your hat. In that event, the IRS views you as an itinerant. Itinerants' travel expenses are not deductible. Your tax home is where you live on a permanent basis and either own or rent. It must continue to be your home while you are away. For example, if you were a young person still living free-of-charge with your parents and you got a temporary out-of-town assignment, your parents' home would not qualify as your tax home because you would not have the burden of rent and other upkeep during your absence. Therefore, your travel expenses would not be deductible. For another example, suppose you owned your home and took a temporary out-of-town assignment and you decided to rent your home out during your absence. In this case, your house does not qualify as your tax home because you have rented it to be a home to someone else. In your case, you have a home in Chicago and I surmise that you are going to keep it there unrented, available to you while you are gone. So your situation in that regard is compatible with having deductible travel expenses.
The next key requirement is that you be away for a temporary assignment. This must be far enough from your tax home to require you to obtain lodging and sleep. Your 14-month assignment several hundred miles away from Chicago certainly meets that test. Your assignment must also be for a definite period. If the period is indefinite, it is not a temporary assignment for tax purposes. Your fellowship is for a definite period, which is good. However, the general rule is that a temporary travel assignment is not temporary if it lasts longer than a year. This seems like an arbitrary rule, but it is a rule, nevertheless. If you could obtain a 12-month assignment, that would be great. If it must be for 14 months, just make sure that the 14-month limit is clearly stated in writing. Then we could ask for a determination from the IRS -- or we could just run with it and hope for the best. After all, your assignment is truly temporary. I would recommend asking for an IRS determination
You are going to receive a separate housing relocation stipend as part of your 14-month compensation package. If your employer thinks this is a non taxable stipend, it will appear on your W-2 in box 12 with a code of "L". When taking deductions, you generally are not allowed to pay for a tax deduction with tax-free money. This would be a double tax break. Therefore, I believe that your travel costs, including meals, transport, and lodging, would only be deductible to the extent that they add up to more than your tax-free housing stipend. In other words, If you have $15,000 of travel costs and a $12,000 stipend, $3,000 is deductible. The stipend in this way would be counted like a reimbursement of travel expenses.
Some caveats: Meals cannot be extraordinary in amount. Also, if you decide to go back and visit Chicago (your tax home) every now and then during your temporary assignment, those costs are personal, not deductible. Finally, clarify with your temporary employer whether they will give you a W-2 or a 1099. I have known some educational institutions to issue 1099's. If you get a 1099, you will have to worry about paying self employment taxes.
I hope this helps, Janice! Let me know if there is anything else I can tell you!
JC Leahy, MA Accounting
TaxHelpWhenYouNeedIt.com (tm)
Tel.301-537-5365
Thursday, October 27, 2011
TAX PLANNING: DEDUCTION FOR FIXING-UP EXPENSES
When you want to sell a house or condo, you might feel the need to fix it up before you show it to prospective buyers. Much has been written about the wisdom of doing this. This article is about whether or not you can deduct fix-up expenses on your income tax return. The answer is: maybe, maybe not.
If the stroke of midnight has passed, your fix-up expense deduction might still be saved if this slipper fits: If the house was a rental property, then you might well make the case that repair and decorating expenses are deductible as rental (Schedule E) expenses. In that event, they will either offset ordinary income (if your $25,000 passive loss exception kicks in) or carry forward to the house’s capital gain calculation as unrecognized passive loss -- thereby reducing your capital gain.
For more information about how to compute capital gain/loss, CLICK HERE. For assistance with your income tax filings contact:
JC Leahy, MA Accounting
TaxHelpWhenYouNeedIt.com (tm)
Silver Spring, Maryland
Tel.: (301)537-5365
Wednesday, October 26, 2011
TAX PLANNING: DON'T FORGET TO CLAIM YOUR INVESTMENT RELATED EXPENSES!!!
By JC Leahy, MA Accounting
Twitter@jc_leahy
|
| JC Leahy |
• Category II: Those that relate to buying and selling particular investments
• Category III: Those that relate to buying, selling, and managing your investments in general
• Category IV: Those that relate to royalty income and real estate rentals.
Costs specifically related to tax-exempt investments can't be claimed on your tax return at all. Congress' reason for making it this way is that if you're not going to have to include the income on your tax return, you shouldn't be able to include the deductions either. That makes sense.
However, here's one little point to remember: IRA's and 401k's and similar vehicles are NOT tax exempt!! They are tax DEFERRED. This means that outlays related to managing your IRA are, indeed, tax deductible if other requirements are met. On the other hand, outlays related to managing your tax-exempt municipal bonds are NOT.
Travel costs to attend an investment seminar, conventions, or stockholder meetings, or to investigate potential rental property are generally NOT tax deductible. Congress made it this way because they noticed that these activities so often occur in warm, sunny vacation locations. That makes a certain amount of sense.
Another investment related outlay that can't be deducted is one that you didn't pay. For example, if your brother Bob paid your annual IRA management fee, you can't deduct it. (Neither can your brother Bob, by the way.) That makes sense.
This leads to one important point of caution, however. If, Bob doesn't pay that IRA management fee, and the IRA management company simply takes it out of your IRA account, you can't deduct it. Why? Because technically, although you control your IRA, you don't own it; it is owned by a trustee. Therefore, if the fee is simply deducted from your IRA account, YOU didn't pay it! Always pay your IRA related expenses from a source outside the IRA; that way they will be deductible!!
Another expense that you just can't deduct is any part of the basic monthly fee for the first telephone line in your house.
Outlays related to buying any investment are capitalized as part of the investment, increasing its cost, or "basis". This reduces the amount of any gain when you ultimately sell the asset.
Outlays related to selling any investment are subtracted from the selling price, reducing it to the "net amount realized." Again, this lowers the amount of any taxable gain when you sell the asset.
CATEGORY III: OUTLAYS RELATED TO GENERAL MANAGEMENT OF YOUR INVESTMENTS
Unless you're a "real estate professional" or professional securities trader, which is pretty narrowly defined, all these expenses of owning and managing your investments go on Schedule A (Itemized Deductions) of your Form 1040 as "Miscellaneous Itemized Deductions" -- all except expenses related to royalties and real estate rentals, which go on Schedule E. We'll talk about Schedule E expenses later; let's focus on Miscellaneous Itemized Deductions for now. Almost anything you can think of could be included here as long as these conditions are met:• You must itemize your deductions using Schedule A of Form 1040.
• You must literally "pay or incur" the expense yourself.
• The expense must be "ordinary and necessary."
• The relationship between the investments and the expense must be "reasonable and proximate."
Here's a partial list of deductions to think about:
- Fees for investment advice
- Subscriptions to investment or financial publications
- IRA setup and custodial fees
- Software or online services to manage your investments
- Safe deposit box fees if used to store investment related documents
- Transportation costs to and from your broker or advisor's office – including mileage
- Attorney, accounting, or clerical costs
- Charges for automatic investment services or dividend reinvestment plans
- Costs to replace lost security certificates
- Straight-line depreciation on your computer and peripherals to the extent they were used to manage investments
- Bank deposit losses if not FDIC insured
- Casualty or theft of non-rental, non-royalty investment property
- Investment fees for non-publicly offered mutual funds shown in Box 5 of Form 1099-DIV
- Proxy fight expenses related to non-frivolous policy disputes
- Salary of a bookkeeper, secretary, or other employee to keep track of investments
- Investment property management expenses
- (Investment interest is also deductible but is reported differently that other "investment expenses." It is NOT included under "miscellaneous itemized deductions;" instead, it has a separate line on Schedule A and potentially requires a Form 4952 to compute its limitations.)
The only people who don't have to worry about the 2% of AGI reduction are professional securities traders, who can put all their expenses on a Schedule C. These insiders have no reduction or limit on their investment expenses writeo-off at all. (Go figure!!!)
- If your filing status is "married filing separately" $79,975
- Single $159,950
- Head of Household $159.950
- Married Filing Jointly $159,950
- (2 Singles living together out of wedlock = $159,950 x 2 $319,900 --- Do you see the big marriage penalty in those numbers?)
Generally, 27% of itemized deductions above these thresholds evaporate in this sneaky Congressional take-back called the "phase-out" of itemized deductions. Gambling losses, medical expenses (minus 7.5% of AGI "floor"), and casualty/theft losses (minus a series of limitations that apply only to casualties and thefts) are not subject to "phase-out."
And again, there is no phase-out for the insiders who are able to list their investment expenses on Schedule C.
FOURTH: If there is anything left of your Miscellaneous Itemized Deductions at this point, it is now subject to the Alternative Minimum Tax -- which completely disallows all of your investment expense deductions.
Have you heard the term "shell game"???!!!!. Thank Congress! LOL!
Royalty and real estate rental expenses, which appear on Schedule E, must meet the same requirements as the Schedule A expenses, namely:
• You must literally "pay or incur" the expense yourself.
• The expense must be "ordinary and necessary."
• The relationship between the investments and the expense must be "reasonable and proximate."
In order to limit the amount of royalty and rental expenses you can deduct, Congress came up with a scheme that classifies all income into 3 categories: "Earned Income," "Portfolio Income" and "Passive Income." . Earned Income includes wages and the net income (or loss) from conducting a business or a farm and certain other things like unemployment compensation. Any other income, in Congress' view, is "Unearned." Unearned income is divided into Portfolio Income and Passive Income. Portfolio Income is interest and dividends stocks, bonds, and bank accounts. Passive Income relates to things such as real estate rental and royalties. The tricky part about Passive Income is that if your expenses exceed your revenues, the resultant loss CANNOT be deducted unless you have another passive activity that is producing an equal profit – which is referred to as a "passive income generator," or PIG. In most cases, because of depreciation of high-cost assets such as buildings, rental activities generate only a small profit, or, more often, a nondeductible loss. This is to say that the deduction for passive investment expenses is limited to the amount of passive revenue. The excess can be carried over to future years until either the asset is sold, in which case the accumulated carried forward losses become part of a capital transaction, or a PIG comes along.
There is one important exception to the limitation of deducting real estate rental losses. If you have more than 10% of a real estate rental and you help manage it in a "active" way, and if your "Modified Adjusted Gross Income" is less than certain thresholds, you may use up to $25,000 of rental loss to offset other non-passive income, such as a salary. The thresholds are:
Married filing separately Zero
Married filing separately as abandonded spouses $50,000
(But the exception amount is $12,500 each, not $25,000)
Single $100,000
Head of Household $100,000
Married Filing Jointly $100,000
(2 Singles living together out of wedlock = $100,000 x 2 $200,000)
(Anybody see a marriage penalty in these numbers?)
Between $100,000 and $150,000, the $25,000 exception is phased down to zero.
Another exception relates to "qualified real estate professionals." These insiders can deduct their real estate losses fully every time without limit.
The bottom line to all of these complexities, is to keep careful track of all those investment related expenses and consult your tax advisor about how to best use them. For assistance with your income tax filings, you may wish to contact JC Leahy & Company, LLC at jcleahy@ymail.com, or telephone (301)537-5365.
Subscribe to:
Posts (Atom)