by Viktoriya Khusit | Aug 11, 2016 | Blog |
Did you know that cost of summer camp your child attended this summer is deductible?
Day or summer camp fees are deductible, even if it’s a sport camp, as long as care was provided while parents were at work. Check with your camp, because if overnight care or tutoring provided, those camp fees are not deductible.
Per IRS Publication 503 “the credit can be up to 35 percent of your qualifying expenses, depending on your income and you may use up to $3,000 of the reimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit”.
This credit directly reduces your tax liability thus increasing amount of your refund.
There are a few points that needs to be met in order to deduct summer camp fees:
- You (and your spouse, if you are married filing jointly) must have earned income for the tax year, meaning – parents need to have a paycheck. If one parent is not working, this credit is not allowed
- The child or dependent care service (summer camp ) must have been used so that you could work or look for employment.
- Your filing status must be anything but married filing separately.
- Your child or dependent must be under 13 or must be disabled and physically or mentally incapable of caring for herself.
- The childcare provider cannot be your spouse or dependent or the child’s parent.
And don’t forget to ask for the name, address and tax ID of the facility, your tax professional will need it in order to claim this summer camp fees credit.
by Viktoriya Khusit | Aug 5, 2016 | Blog |
Medical expenses are subject to 10% of AGI and are deductible on schedule A.
But did you know you can deduct payments that you made for medical expenses for your ex-spouse? Even if couple is not filling joint return, one partner who paid for another one’s medical expenses can deduct those on his/her tax return. Remember, couple had to be married, while payment occurred for medical expenses or when medical treatment was received.
Deduction is taken in the year payment is made, even though treatment might have happened in the different year. If a payment for medical expenses made with a credit card, deduction is claimed in a year charge was made, not a credit card statement was paid.
Also to be able to deduct medical expenses paid for someone else, this “someone else person” needs to be either qualifying child (age 19 and under, or until 24 if a child full time student, or any age if child is disabled) or a qualified relative- someone who is closely related to you.
Per IRS publication 502, deductible medical expenses may include but are not limited to the following:
- Payments of fees to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
- Payments for acupuncture treatments or inpatient treatment at a center for alcohol or drug addiction, for participation in a smoking-cessation program and for drugs to alleviate nicotine withdrawal that require a prescription
- Payments to participate in a weight-loss program for a specific disease or diseases diagnosed by a physician, including obesity, but not ordinarily payments for diet food items or the payment of health club dues
- Payments for insulin and payments for drugs that require a prescription
- Payments for false teeth, reading or prescription eyeglasses or contact lenses, hearing aids, crutches, wheelchairs, and for guide dogs for the blind or deaf
by Viktoriya Khusit | Jul 26, 2016 | Blog |
Travel expenses are expenses that occurred while taxpayer was traveling away from their ” tax home”. “Tax home” is the place where taxpayer conducts business on regularly basis regardless of where he/she lives, but for majority taxpayers “tax home” is place where they live. Deductible travel expenses might include cost of transportation, meals, tips, and hotel cost. If your trip was personal in nature none of the expenses are deductible even if you engaged in some business activity during a trip.
Cost of bringing your spouse or child is considered personal expense and is not deductible, unless it is a partner or an employee.
If you travel for convention in North America and its related to your business any transportation and lodging expenses deductible at 100% and meals are at 50%.
If convention happens on a cruise ship, it must to be directly related to your business, and it has to be on board of US flag ship and all the ports of calls must be in the US. $2000 worth of expenses for the cruise convention can be deducted.
If you have to travel outside of the US, to maintain or acquire new business, travel expenses can be partially or fully deductible. As long as a trip lasts one week or less, taxpayer can deduct 100% of transportation cost.
For trips more than one week, there is 25% rule, which states that taxpayer can deduct 100% of transportation cost if he/she spent less than 25% of the total days vacationing.
by Viktoriya Khusit | Jul 22, 2016 | Blog |
‘I want to deduct all my meals, oh and please don’t forget coffee “. All tax professionals hear this way too often. But truth is: NO, you cannot deduct your coffee or lunch or dinner. Generally, tho cost of meals considered a personal expense and are not deductible, unless substantial amount of business discussion happened before, during or after a meal, or you expect to receive a business benefit by providing a meal.
According to IRS Publication 463, these tests have to met in order to take a deduction:
- The main purpose of the combined business and entertainment was the active conduct of business,
- You did engage in business with the person during the entertainment period,
- You had more than a general expectation of getting income or some other specific business benefit at some future time, and
- Meal can happen directly before or after a substantial business discussion
In general, meals are deductible at 50%, by both employees and independent contractors. Pilots, flight crews, interstate truck drivers, railroad employees, merchant mariners, and other transportation industry workers can deduct 80% of the unreimbursed meal expenses.
Employers can deduct some meals at 100% such as employer sponsored holiday party or a lunch for employees
However there are some meals that are not deductible at all- lavish and extravagant, as they are not ordinary, necessary and reasonable .
by Viktoriya Khusit | Jul 20, 2016 | Blog |
Ever thought of becoming an actor or even better have you child be a star?!
And here you go: pay for acting classes and camera coaches, taking headshots, getting and paying manager and agent fees. All those expenses are deductible if you are aggressively pursuing acting career.
Regardless of how aggressive you are pursuing your dream of becoming a star, union dues are always deductible, but only if you itemize.
Aspiring actor can deduct costume purchases, unless clothes for the costume can be worn as everyday wear. This type of purchase is not deductible. Don’t forget to keep your receipts.
And no, you cannot deduct tickets to a movie theater or a subscription to Netflix, unless you really did a research and documented in details what was the purpose of watching this specific piece and what did it do for you and your career.
Bottom line what expenses can be deductible depends on how IRS looks at activity and classification of it as a activity for profit or a hobby.
