Official Tax Advice Thread

[Nathans_Dad]

Any accountants or tax lawyers out there?? With the 2005 tax season coming up I thought it might be good to have a tax advice thread. I'll start:

My wife pays her own medical malpractice insurance. This is the first year we have paid this for her, it has always been paid by her employer before. I assume this is deductible as a cost of doing business but I wanted to make sure since it is a sizable amount of money...anyone?

[red-beard]

Yes, it should be deductible. Get one of the professional tax programs. How is your wife setup now? Did she incorporate? Is she on her own?

[legion]

My tax advice: failure to file will result in jail time. Failure to pay the correct amount will result in a fine.

Seriously, I just try to shoot straight. I've learned that advice directly from the IRS or your state revenue service (if you can get through to them) is designed to get you off the phone as quick as possible. It is not necessarily the correct or legal answer.

[Nathans_Dad]

She is an independent contractor. She pays her own overhead and is paid a flat hourly fee for her services. We do our own taxes and send in quarterly invoices.

We are considering incorporating in the future, but that depends on what my future job ends up being.

[red-beard]

It's part of the cost of doing business, so it should be. I use Taxcut for my taxes, but haven't installed the program yet this year.

from IRS publication P529

http://www.irs.gov/publications/p529/ar02.html#d0e396

Unreimbursed Employee Expenses
You can deduct only unreimbursed employee expenses that are:

Paid or incurred during your tax year,

For carrying on your trade or business of being an employee, and

Ordinary and necessary.

An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary.

You may be able to deduct the following items as unreimbursed employee expenses.

Business bad debt of an employee.

Business liability insurance premiums.

Damages paid to a former employer for breach of an employment contract.

Depreciation on a computer or cellular telephone your employer requires you to use in your work.

Dues to a chamber of commerce if membership helps you do your job.

Dues to professional societies.

Education that is work related.

Educator expenses that are more than you can deduct on Form 1040, line 23.

Home office or part of your home used regularly and exclusively in your work.

Job search expenses in your present occupation.

Laboratory breakage fees.

Legal fees related to your job.

Licenses and regulatory fees.

Malpractice insurance premiums.

Medical examinations required by an employer.

Occupational taxes.

Passport for a business trip.

Repayment of an income aid payment received under an employer's plan.

Research expenses of a college professor.

Rural mail carriers' vehicle expenses.

Subscriptions to professional journals and trade magazines related to your work.

Tools and supplies used in your work.

Travel, transportation, entertainment, and gift expenses related to your work.

Union dues and expenses.

Work clothes and uniforms if required and not suitable for everyday use.

http://www.irs.gov/publications/p529/ar02.html#d0e396

[Nathans_Dad]

Cool thanks Red Beard!!

[VaSteve]

Originally posted by Nathans_Dad

My wife pays her own medical malpractice insurance. This is the first year we have paid this for her, it has always been paid by her employer before. I assume this is deductible as a cost of doing business but I wanted to make sure since it is a sizable amount of money...anyone?

She can deduct it assuming she's in the medical field.


Seriously, yes she can.


Steve, CPA

[Moses]

A few year ago I was "randomly" selected to undergo the IRS version of a colonoscopy.

A team of IRS lawyers spent 3 days going through my records. After three days, the lead investigatior called and offered a "Settlement" of $5,000. I asked what they had found. Answer; NOTHING! But he said if they continued looking, they would likely find something and my accountants bills would exceed $5,000 anyway. I accused him of extortion, refused to pay and told him that all future communication must be in writing to my accountant and attorney.

They left empty handed. Why? Because I pay my taxes. Every damn penny. I didn't lose one wink of sleep during the audit.

[Nathans_Dad]

Moses, the real question is: Did they let you go without another CScope for 3, 5 or 10 years??

[GDSOB]

Beware the AMT!!!!

[Moses]

Originally posted by GDSOB
Beware the AMT!!!!

I have no idea why that's legal. Essentially they pick out a group of taxpayers and disallow deductions for state income tax and property tax. In California, that's BIG.

[red-beard]

Originally posted by Moses
I have no idea why that's legal. Essentially they pick out a group of taxpayers and disallow deductions for state income tax and property tax. In California, that's BIG.

Oh, no. They only make 'Rich" people pay AMT. The problem is the 'middle class' of today is now 'rich'.

Think hard. Find a tax that was not originally designed to 'soak the rich'.

Poll Tax is the only one I can think of.

What else?

[legion]

Telephone tax--used to fund the Spanish-American war.

It's still with us today, over 100 years later...

[red-beard]

100 years ago, only rich people had phones.

Virtually every tax starts as a 'soak the rich' tax, but they always shift until they actually produce income, which means, the people have to pay.