4 - Business Deductions

4 - Business Deductions - Individuals ,CPA 1 2 3...

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Business Deductions for  Individuals Presented by Akore Berliner, CPA
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1. Business Expense 2. Employee 3. Self Employed  (independent contractor)
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Ordinary necessary , and  reasonable  expenses  incurred while  operating  a business
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Subject  to will and control  of another with  respect to what shall be done and how it  shall be done Another furnishes tools or the place of work Income based on time spent rather than task  performed
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NOT  Subject to will and  control  of another  with respect to what shall be done and how it  shall be done Furnishes  their own  tools or place of work Income based on task performed  NOT  time  spent (invoiced)
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Employee Unreimbursed  expenses  deductible  FROM  AGI  as  Misc Itemized Deductions  Subject to 2% of AGI floor Reported on Form 2106 (Employee Business Expenses) and  Schedule A (Itemized Deductions) Reimbursed  expenses  are  not deducted  by employee they are deducted by the employer!
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Self-employed  Expenses are deductible  FOR  AGI statement  No itemizing Business Expenses are a direct offset to income
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Transportation Travel Moving Education Entertainment Other (ordinary & necessary)
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Gas / Car or Truck Expenses Deduction is  limited only from job site to job site  commuting to/from  temporary  work place Employee Commuting  from home to work and back  is nondeductible ! Exceptions: Additional costs incurred to transport heavy tools Employees with more than one job
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Deduct Either:  1. Actual  expenses OR Must keep adequate records of all expenses and  depreciation is limited, or 1. Standard Mileage Rate 55 cents per mile for business miles for 2009 Plus parking, tolls, etc. Adequate documentation of mileage required
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Transportation, lodging, 50% meals, and  miscellaneous expenses Expenses while “ away from tax home ”  overnight on business Longer than ordinary work day  Taxpayer will need to rest during release time Temporary situation (not in excess of 1 year) Tax Home = business location, post, or station of the  taxpayer
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Convention travel expenses Must be directly related to taxpayer’s trade or  business (not for education) Example: Doctor attending out-of-town seminar on  estate planning would not have deductible travel  expenses Accompaniment by the spouse or dependent must  serve a bona fide business purpose Meals, lodging and other expenses must be   allocated between business and personal days
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4 - Business Deductions - Individuals ,CPA 1 2 3...

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