TAX: Business Expenses Flashcards
If an employee does not get reimbursed by their employer, is that deductible?
No, not deductible
If a employee gets reimbursement under plan that is not under an accountable plan, how does that impact tax?
It will be taxable income
What is an accountable plan, what are the qualifications?
- Employees must substantiate all expenses to be reimbursed
- All excess reimbursements must be retired to the employer
Define transportation expenses?
Going from point A to point B
Can an employee deduct traveling from their home to work?
No
Is traveling from one job to another job deductible?
No
Is travel from a temporary work location deductible?
Yes.if the assignment is short term in nature
Can employer deduct qualified transportation fringe benefits (parking, mass transit options, etc)?
No, it is no longer deductible for the employer
What travel expenses are deductible?
Away from home, means that you must be gone overnight.
- Meals
- Lodging
- Dry cleaning
- Etc.
How do you handle a situation where the tax payer is indefinite period of time or has to leave for work for more than one year?
The tax home shifts to the new location.
There would be no travel expenses.
How much of meals can be deducted in a travel mode?
50%
How do you handle business travel with personal travel?
1) Look at the total number of business days compared to the total days of the trip (anything related to business during that day has more than 50% business, it counts as a full business day). Business days HAVE to exceed 50% to consider travel to the location (i.e. airfare)
2) If Friday and Monday are both business days, then you can count the weekend.
If you are an investor, you do not get to deduct seminars
Are entertainment expenses deductible?
They are no longer deductible.
If a taxpayer makes a business gift, what is the limit per donee?
$25 per donee, per year
What are the requirements for education expense to be deductible?
No deductible if they are:
- To meet minimum standards of current job or
- To qualify taxpayer for a new trade or business
Are deductible if:
- To maintain or improve existing skills required in current job
- To meet requirements of employer or imposed by law
