Tax Deduction Questions

[Erich_870]

All you tax experts out there, lend me your ears! :P

Soon the wife and I will be home owners for the first time and along with the mortgage comes the interest tax write off :clap:

Since our tax returns are moving to a new level of complication, it got me thinking about other tax deductions.

How would I go about deducting the cost of items for work purposes?

Example: I'm an engineer and I do a lot of on site inspection during the summer. This requires that I have OSHA required safety vests, hard hats, boots, ear plugs, etc. While these costs are small, they do add up. On top of that, I play a huge roll in design changes in the field. This fact has me considering buying a laptop. I'd love to get a Panasonic Tough Book :king:

I want to know if I could see a tax benefit for such a large purchase.

Any insight?

Erich

[Bob98SR5]

if you are not sure, hire an accountant. its worth it if you have a lot of deductions and if you are not comfortable doing it yourself. while what you are describing is not even as close to complicated as people with businesses (like me), its definitely better to have a professional look at your overall picture because often times it is more than just your equipment deductions

[Erich_870]

if you are not sure, hire an accountant. its worth it if you have a lot of deductions and if you are not comfortable doing it yourself. while what you are describing is not even as close to complicated as people with businesses (like me), its definitely better to have a professional look at your overall picture because often times it is more than just your equipment deductions


I totally agree about hiring a professional. The problem at this moment is I'm so busy at work that I can't set up any meetings. I've not been getting home until 7pm or later so that will have to wait. That being said, I'd like to hear a little insight so I can stop pondering it all the time :angel:

Erich

[MTL_4runner]

So are you self employed or are these just expenses that your company won't reimburse you for?

[Osiris]

If you have job related expenses that are non-reimbursed or non-reimbursable by your company, then you would deduct them on your Sched. A which is your itemized deductions form. This is where you would deduct your home mortgage interest as well.

Job expenses are deductible subject to a 2% floor above your AGI. Adjusted Gross Income.

BTW, I am a CPA, tax accountant for an investment firm for ultra-high net worth clients.

[Erich_870]

So are you self employed or are these just expenses that your company won't reimburse you for?


Without getting too specific, the principle who authorizes new equipment/supplies purchases thinks he's "frugal" by not buying necessary equipment. Read: Oil changes for company rigs are a YEARLY occurrence, if that :shake: Also, safety equipment is handled as a personal expense.



If you have job related expenses that are non-reimbursed or non-reimbursable by your company, then you would deduct them on your Sched. A which is your itemized deductions form. This is where you would deduct your home mortgage interest as well.

Job expenses are deductible subject to a 2% floor above your AGI. Adjusted Gross Income.

BTW, I am a CPA, tax accountant for an investment firm for ultra-high net worth clients.

What does a "2% floor" mean?

Keep the info coming!

Erich

[MTL_4runner]

Ok then Osiris is exactly right, those are personal job expenses subject to the 2% floor (that means you only deduct what exceeds 2% of your AGI, floor = starting point).

Job Expenses: You may deduct un-reimbursed costs of union dues, job educational courses, work clothes, entertainment, travel, and looking for a new job. These deductions are included as miscellaneous expenses of which only the excess over 2% of your adjusted gross income is deductible. The deductible amount is included in the 3% reduction explained above.

Un-reimbursed employee travel expenses are deductible but are subject to the 2% of adjusted gross income (AGI) floor on Schedule A. If you are self-employed, the 2% floor does not apply to travel expenses. To support your travel expense deductions, keep records that comply with IRS rules. To avoid the 2% AGI floor, consider an "accountable" reimbursement arrangement of your travel expenses with your employer.

Standard Mileage Rate $0.36

Adjusted gross income is defined as gross income less allowable adjustments, such as IRA, alimony, and other deductions. AGI determines whether various tax benefits are phased out, such a personal exemptions, itemized deductions, and the rental loss allowance and modified adjusted gross income.

A floor of 2% of adjusted gross income (AGI) applies to the total of most miscellaneous deductions that are claimed on Schedule A of Form 1040. The purpose of the floor is to reduce or eliminate such deductions. Only expenses above the floor are deductible.

[Osiris]

A tax advantage move (read as tax aggressive) would be to have a Sched. C to handle all your contract items that are not handled by your employer. Put all your expenses on the Sched. C (including the ones the employer reimburses) and you pay all the expenses. Have your employer pay you in a separate check from your payroll check on all reimbursements. You will have revenues in the form of the reimbursement checks from your employer and the expenses will be all expenses that you had to pay for (reimbursed or not) and you will end up with the non-reimbursed expenses that you wanted to put on Sched. A, subject to 2% of your AGI, but instead all of the losses will reduce your AGI as the Sched C will flow right to page one of your 1040! You get around the 2% floor. WhhhaaaLaaa! That'll be $300. Make check out to Osiris and that is deductible too! :)

[MTL_4runner]

A tax advantage move (read as tax aggressive) would be to have a Sched. C to handle all your contract items that are not handled by your employer. Put all your expenses on the Sched. C (including the ones the employer reimburses) and you pay all the expenses. Have your employer pay you in a separate check from your payroll check on all reimbursements. You will have revenues in the form of the reimbursement checks from your employer and the expenses will be all expenses that you had to pay for (reimbursed or not) and you will end up with the non-reimbursed expenses that you wanted to put on Sched. A, subject to 2% of your AGI, but instead all of the losses will reduce your AGI as the Sched C will flow right to page one of your 1040! You get around the 2% floor. WhhhaaaLaaa! That'll be $300. Make check out to Osiris and that is deductible too! :)


Holy smokes, good info! :thumbup:

[Osiris]

There's a bunch more where that came from. And even more in the residential rental real estate fund area!

[Erich_870]

A tax advantage move (read as tax aggressive) would be to have a Sched. C to handle all your contract items that are not handled by your employer. Put all your expenses on the Sched. C (including the ones the employer reimburses) and you pay all the expenses. Have your employer pay you in a separate check from your payroll check on all reimbursements. You will have revenues in the form of the reimbursement checks from your employer and the expenses will be all expenses that you had to pay for (reimbursed or not) and you will end up with the non-reimbursed expenses that you wanted to put on Sched. A, subject to 2% of your AGI, but instead all of the losses will reduce your AGI as the Sched C will flow right to page one of your 1040! You get around the 2% floor. WhhhaaaLaaa! That'll be $300. Make check out to Osiris and that is deductible too! :)


Great info, thanks!

I'll have to read up on the Sched C.

Erich