Ten Most
Commonly Asked Tax Questions
(For the 2009 tax year unless stated otherwise)
1.
Can I deduct a home office?
In order to deduct expenses related to having a home
office, you must use a certain part of your home exclusively and regularly
for your trade or business. This space does not have to be separated by a
permanent partition. Additionally, this part of your home must be one of
the following:
If you are an employee, in addition to the above, your business use must be for
the convenience of your employer.
2.
If I am an employee, can I deduct my cell phone and my computer as a
business expense?
To deduct these expenses, the use has to be for the convenience of your
employer and required as a condition of your employment. If you use your
computer or cell phone during working hours to carry on your employer’s
business, and you need it to properly perform your duties, it would probably
qualify as a deduction.
Other items often overlooked that can be deducted as an employee are:
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Dues to the chamber of commerce, if the membership
helps your job
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Dues to professional societies
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Education that is work-related
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Job search expenses in your present occupation
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Legal fees related to your job
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Licenses and regulatory fees
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Malpractice insurance premiums
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Passport for business trips
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Subscriptions to professional journals
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Tools and supplies used in your work
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Union dues and expenses
-
Work clothes (including shoes) and uniforms if
required and not suitable for everyday use.
3.
What is the standard mileage rate?
Beginning Jan. 1, 2009, the standard mileage rates for the use of a car will be:
55 cents per mile for business miles driven;
24 cents per mile driven for medical or moving purposes; and
14 cents per mile driven in service to a charitable organization.
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4.
Do I have to keep a mileage log for the business miles I deduct?
Some type of timely-kept record should be maintained.
It doesn’t necessary have to be a mileage log. If you frequent the same
places on business, a calendar, palm pilot, or other similar log will
usually suffice. Bottom line: the better your records are, the more likely
they will be to stand up to audit scrutiny. If you choose to keep your
records on your laptop or palm pilot, be sure to print them out or back them
up on a regular basis!
5.
Do I have to keep receipts for everything I deduct?
A receipt or paid bill is generally not required for
expenses that are less than $75, with the exception of lodging. A diary,
log, or similar record should, however, be maintained.
6.
Can I deduct my child’s college tuition?
Up to $4,000 of college tuition and fees are deductible
if your AGI is not more than $65,000 ($130,000 if married filing jointly) or
up to $2,000 if your AGI is higher than $65,000 but not more than $80,000
($160,000 if married). Note: Tuition and fees paid in 2008 for an
academic period that begins in the first three months of 2009 can also be
used in figuring the deduction.
7.
How much of my health insurance can I deduct if I am self-employed.
100% of health insurance premiums (up to the amount of self-employed earnings)
can be deducted against income.
8.
Can I write-off business gifts?
Up to $25 can be written-off for each gift to a single
recipient, per year, not including incidental costs like mailing, packaging,
or engraving.
9.
Do I have to keep a receipt for the cash I throw in the offering plate at
church each week?
If the donation is $250 or more you will need an acknowledgement from the organization. Prior law allowed taxpayers to back up their donations of money with personal bank registers, diaries or notes made around the time of the donation. Those types of records are no longer sufficient. If the donation is
less than $250 you will need one of the following:
-
A cancelled check
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A receipt from the organization showing date and amount of contribution
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Credit card statement showing the name of the charity and transaction posting date
Bank statements should show the name of the charity and the date and amount paid
10.
How long do I have to keep my tax returns?
Generally income tax returns should be kept for three years. If, however,
the IRS finds out that you didn’t report more than 25% of your income, they
can go back six years.
Other useful information:
Social security cap $106,800 for 2009 -
2008 Standard deduction $ 10,900 if married, $5,450 if
single
-
2008 Exemptions $ 3,500
-
Basic traditional and Roth IRA deductions:
$5,000; if 50 or over: $6,000
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