The Tax Professionals Blog
Can the Teachers’ Classroom Supplies Deduction Exceed $250?
Posted by Lee Reams Sr. on
Congress, recognizing that most classroom teachers spend a significant amount of their own money on classroom supplies, granted them a special deduction of $250 (indexed for inflation after 2015) as an adjustment to gross income – referred to as an above-the-line deduction – rather than an itemized deduction.
Maximizing Investment Expenses
Posted by Lee Reams Sr. on
Investment expenses are deducted from investment income when determining net investment income (NII). NII is used in two important tax computations: the 3.8% Sec 1411 tax on net investment income (NIIT) for higher-income taxpayers and the limitation on the deductibility of investment interest, Sec 163. Investment interest can only be deducted to the extent of gross investment income less allowable investment expenses. Therefore, it is important to understand what is classified as investment expenses for both computations.Uber Driver Tax Treatment
Posted by Lee Reams Sr. on
This analysis does not address the potential employee/independent contractor issue related to Uber divers; it only deals with the tax treatment of drivers who are independent contractors.Child-Care Credit, Split Schedule C
Posted by Lee Reams Sr. on
When both spouses in a married couple are involved in the operation of an unincorporated business, it is fairly common– but incorrect – for all of that business’s income to be reported on one spouse’s Schedule C. In this case, the spouse not filing a Schedule C loses out on the chance to accumulate his or her own eligibility for Social Security benefits. In addition, to claim a child-care credit, both spouses on a joint return must have earned income (or imputed income if one of the spouses is a full-time student or is disabled), so unless the non-Schedule C spouse has another source of earned income, the couple will not be allowed a child-care credit.Tax Treatment of Advanced Premium Tax Credit (APTC) Payback for Medical Deduction Purposes
Posted by Lee Reams Sr. on
Regarding the situation in which a client has to pay back part of the advance PTC, students have asked if that payback is a deduction in the year paid back (like, for example, state income tax) or in the year that the advance PTC was allowed. They also want to know how an additional amount of PTC is treated when the return is prepared: Does it affect the medical deduction on Schedule A or the above-the-line deduction for those who are self-employed? According to IRS Pub 502, advance PTC is netted in the year of the insurance.
Regarding the situation in which a client has to pay back part of the advance PTC, students have asked if that payback is a deduction in the year paid back (like, for example, state income tax) or in the year that the advance PTC was allowed. They also want to know how an additional amount of PTC is treated when the return is prepared: Does it affect the medical deduction on Schedule A or the above-the-line deduction for those who are self-employed? According to IRS Pub 502, advance PTC is netted in the year of the insurance.