Employee/Self-Employed Business Expenses

Note that most of the Employees expenses are claimed in Schedule A and are called itemized deductions:
Includes expenses for your job for which you weren’t reimbursed, but you only get the amount in excess of 2% of your AGI (adjusted gross income), and only if you can itemize.  For instance, if your AGI is $50,000, you must have at least $1,000 in employee business expenses before you will begin to benefit from the deduction.

Self-Employed:
You are allowed to deduct most business expenses in full.

• Advertising and Promotion Expenses (Self-employed)
• Books and Publications
• Books, trade journals, newspapers and publications for your trade or profession

Dues and Fees:

• Dues to a professional organization for people in your profession
• Union dues, initiation fees, and assessments for benefit payments to unemployed union members.
• Regulatory fees for your profession
• Dues to chambers of commerce and similar organizations if the membership helps you carry out your job duties (see exceptions).
• Licenses paid to state or local governments

Education and Research

• Educational expenses related to your present work that maintains or improves your skills.
• Research expenses

Equipment and Supplies

• Business use of computer.
• Employees:  Must be for the convenience of your employer and required as a condition of your employment.
• Supplies and tools you use in your work

Home Office

• Expenses for an office in your home IF part of the home is used regularly and exclusively for your work.  Employees:  the use of your home office must also be for the convenience of your employer.
• For more information, see IRS Publication 587

Internet

• Employees:  Must be for the convenience of your employer and required as a condition of your employment.

Job hunting expenses (Employees)

To deduct job hunting expenses, you must be looking for a job in your present line of work or be between jobs (you’re not changing professions or looking for your first job)

• Resume preparation (drafting, typing, printing, mailing, faxing)
• Employment agency fees
• Executive recruiters’ fees
• Portfolio preparation costs
• Career counseling to assist you in improving your position
• Legal and accounting fees you pay in connection with employment contract negotiations and preparation
• Advertising
• Transportation costs to job interviews
• Long distance calls to prospective employers
• Newspapers you purchase to read the employment ads
• Other business publications you purchase to read the employment ads
• Half of your meals you pay for that are directly related to your job search
• If you take a trip away from home to look for a new job, your expenses for traveling, lodging, meals (50% of the cost), etc. are deductible only if the primary purpose of your trip is to look for a job. To substantiate the purpose of your trip, keep a daily log of your interviews, application efforts, etc.

Meals and Entertainment

• Meals and Entertaining costs (only 50% of the cost is deductible).  Keep a record of the date, place, amount of expenses, people present, business purpose, and business discussed.  Also keep receipts for expenses over $75.
• For more information, see IRS Publication 463

 Telephone Charges

• Business use of cellular phone
• Cost of long-distance business calls charged to home phone
• Separate business telephone (home phone line is not deductible)

Travel and Transportation

• Traveling costs incurred while away from home on business
• Traveling costs paid in connection with a temporary work assignment
• Transportation between your home and a temporary work location if you have no regular place of work but you ordinarily work in the metropolitan area where you live and the temporary work location is outside that area
• Transportation between your home and a temporary work location if you have at least one regular workplace for this employment. It doesn’t matter how far away the temporary location is in this case.
• Transportation from one job to another if you work two places in one day
• If you are self-employed and your home is your principal place of business, all business travel is deductible.
• For more information, see IRS Publication 463

Uniforms and Gear

• Protective clothing and gear
• Uniforms (except if you’re full-time active duty in the armed forces)
• Dry cleaning costs for your uniforms or protective clothing (not for your everyday clothing, though)
• Specialized clothing designed for your job, as long as it’s not suitable for everyday wear
• Safety equipment, such as hard hats, safety glasses, safety boots, and gloves

Miscellaneous

• Gifts, but only up to $25 per recipient (you can also add expenses directly associated with the gift, like a gift rapper)
• Passport for business travel
• Postage
• Office supplies
• Printing and copying
• Legal and professional services (accounting & tax service fees)
• Medical exams required by your employer
• Occupational taxes if they’re charged at a flat rate by your city or other local government for the privilege of working in that area
• Business liability insurance premiums
• Job dismissal insurance premiums
• Damages you pay to a former employer for a breach of employment contract
• Employee contributions to state disability funds

Self-Employed Only

• Interest on business loans
• Self-Employed health insurance
• Commissions and fees
• Business insurance
• Retirement Plans like Keogh or SEP
• Rental of business property
• Office rent and utilities
• Repairs and maintenance
• Business taxes and licenses

Miscellaneous Schedule A Expenses

Real estate expenses:
Mortgage interest
Mortgage prepayment penalties
Penalties of early withdrawals
Points on principal residence financing
Real estate taxes

Auto registration fees-subject to limitations

Charitable contributions (cash and non-cash) made to qualified U.S. charities. (note that you will need an official receipt from the charity for a single donation over $250, or if you have given cash)

Investment expenses:
Accounting fees (preparation of tax return)
Brokerage fees
Investment fees
Legal fees
Safe deposit box rental
Interest on margin accounts

Taxes
Certain special assessments
Condo or coop maintenance (property tax portion)
Disability insurance tax (some states)
Foreign taxes
Income tax (state and local)
Occupational taxes
Personal property tax
Real property tax
State transfer tax
Withholding taxes

Casualty and theft Losses – subject to limitations

Qualified Medical Expenses –

Generally, you can only deduct the excess over 7.5% of Adjusted Gross Income (AGI), and then only if you can itemize on Schedule A.  This means that if you make $50,000, you can only deduct the amount of medical expenses over $3,750.

• Acupuncture
• Air conditioner or air purifier necessary for relief from allergies or other respiratory problems
• Alcoholism treatment
• Analysis
• Artificial limbs
• Artificial teeth
• Birth control pills prescribed by a doctor
• Braille books and magazines used by a visually-impaired person
• A clarinet and lessons to treat the improper alignment of a child’s upper and lower teeth
• Contact lenses
• Cosmetic surgery to improve a deformity
• Dental fees and supplies
• Diet, special. When prescribed by a doctor, you can deduct the extra cost of purchasing special food to alleviate a specific medical condition.
• Doctor or physician expenses
• Drug addiction treatment
• Elastic hosiery to treat blood circulation problems
• Exercise program if recommended by doctor to treat a specific condition
• Extra rent/utilities for a larger apartment required in order to provide space for a nurse/attendant
• Eye surgery, when it is not for cosmetic purposes only
• Fertility treatment:  Limited to procedures such as in vitro fertilization (including temporary storage of eggs or sperm) and surgery, including an operation to reverse prior surgery that prevented the person operated on from having children.
• Guide dog
• Hospital care
• Household help for nursing care services only
• Insurance premiums for medical care coverage
• Laboratory fees
• Lead-based paint removal where a child has or had lead poisoning
• Legal fees paid to authorize treatment for mental illness
• Lifetime care advance payments
• Lodging expenses while away from home to receive medical care in a hospital or medical facility
• Long-term care insurance and long term care expenses (with limitations)
• Mattresses and boards bought specifically to alleviate an arthritic condition
• Medical aids. This includes wheelchairs, hearing aids and batteries, eyeglasses, contact lenses, crutches, braces, and guide dogs (including costs paid for their care).
• Medical conference admission costs and travel expenses for a chronically ill person or a parent of a chronically ill child to learn about new medical treatments.
• Medicines and prescription drugs
• Nursing care.
• Nursing home expenses if the there to obtain medical care.
• Oxygen and oxygen equipment.
• Reclining chair bought on a doctor’s advice by a person with a cardiac condition.
• Special education tuition of mentally impaired or physically disabled person.
• Smoking cessation programs.
• Swimming costs, if therapeutic and prescribed by a physician.
• Telephone cost, repair and equipment for a hearing-impaired person.
• Television equipment to display the audio part of a TV program for hearing-impaired persons.
• Transplants of an organ, but not hair transplants.
• Transportation costs for obtaining medical care.
• Travel expenses for parents visiting their child in a special school for children with drug problems, where the visits are part of the medical treatment.
• Weight loss program, if it is recommended by a doctor to treat a specific medical condition or to cure any specific ailment or disease
• Whirlpool baths prescribed by a doctor.
• Wig for the mental health of a patient who lost his or her hair due to a disease.
• X-ray Services

Cancelled Debts(탕감된 부채)

  일반적으로 부채가 탕감된 경우, 탕감된 금액이 그 해에 수입으로 간주되어 소득세를 내야 한다.  예를 들어, Credit Card Balance $10,000 을 갚지 않고 은행과 $6,000 에 해결하였다고 가정하면, 갚지 않고 변제된  $4,000 을 소득세보고시 소득으로 신고하여야 한다.

  그러나 이 규정에 대한 몇 가지 예외규정이 있다. 대표적인 예는 파산법에 의하여 파산한 경우, 거주하고 있던 집에 대한 융자인 경우, 법에 의한 파산은 아니지만 실제적으로 파산하여 실질적인 자산이 없는 경우 등이다.

Generally, if debt is forgiven, it results in a taxable income to you. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of forgiven debt on your principal residence.  For married person filing a separate return, the limit is $1 million.

When your debt is reduced or eliminated, you will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender.  This form will show the amount of debt forgiven and the fair market value of any property foreclosed. Mortgage debt was forgiven or reduced due to the mortgage restructuring, foreclosure or short sale, you also may exclude it from your income.
To qualify, the forgiven debt must have been used to buy and/or refinanced in order to: build or substantially improve your principal residence and be secured by that residence.

Proceeds of refinanced debt used for other purposes such as to pay off credit cards, do not qualify for the exclusion.  Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision.  In some cases, however, other tax relief provisions such as insolvency may be applicable.  See instructions for Form 982*.
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회계사로 일한 25년동안 가장 많이 받아본 질문중의 하나가 “회사 설립을 해야 하는데 Corp ( Corporation )이 좋을까요 LLC(Limited Liability Company)가 좋을까요” 입니다.

미국에서 사용하고 있는 회사의 형태는 Sole Proprietorship, Partnership, Limited Liability Company, S-Corp, C-Corp 등이 있다.  새로운 사업을 시작함에 있어서 그 사업에 가장 적합하고 효율적인 회사의 형태를 선택하는 것은 매우 중요하기 떄문에 전문가와 상의하는 것이 바람직하다.

C Corp. 의 설립:

Corp 은 사업을 하려는 각주에 회사설립 서류를 소정의 설립비 와 함께 제출 함으로써 설립한다. 회사를 설립한 사람을 발기인 (Incorporator)이라하고 발기인은 이사(Director)들을 선출한다  이사(Director)들이 주식을 발행하여 주식을 소유한 사람들이 주주 (Share Holder) 가되고 회사의 소유주인 주주들이 회사의 운영을 하게될 이사나 사장을 임명하게 된다.

C Corp 의  장점:

1)      회사 설립이 용이하다.

1인 주주가 가능하고 자본금에 대한 규제가 없고 주마다 다르지만 설립비가 저렴하고 신속하게 24시간 안에 회사설립이 가능하다.

2)      소유권의 이전이 용이하다 .

회사의 소유권이 주식을 양도함으로서 부분적으로도 이전이 가능하고외국인도 주주가 될수 있기 떄문에 투자 유치가 용이하고투자이민의 좋은 수단이 될 수있다.

3)      회사의 생명이 영구적이다.

회사의 임원이나 주주의 변동이 있어도 회사는 존속을 영원히 할수있다.

4)      회사의 부채에 대한 주주의 유한책임.

일반적으로 회사에서 발생한 채무에 대하여 주주를이 투자한 자금외에는 책임을 지지 않는다.

5)      소유와 경영이 분리되어있다.

소유와 경영이 분리되어 전문 경영인을 사용하기 용이하고 회계의 투명성을 유지할 수 있다.

C Corp. 의 단점:

여러가지 장점에도 불구하고 Corp은 소유주와 확실하게 구분된 기업으로써 소득세를 따로 내야하는 이중과세의 문제가 있다.  회사에서 수익이 발생 했을때 Corp.이 그 수익에 대하여 소득세를 내고난 후 순수익을 주주들에게 배당해야 하기 때문에 주주들이 받은 배당금에 대하여 소득세를 내야 한다.  결국 회사에서 발생한 수익에 대하여 회사도 소득세를 내고 주주들 도 배당에 대한 소득세를 내기 때문에 이중과세라 불린다.  이중과세의 문제를 해결하기 위한 지속적인 노력이 있었으며 그중에  선호되고 있는 회사의 형태로 S Corp 과 LLC가 있다.

LLC 의 설립 절차:

LLC(Limited Liability Company) 는 와이오밍 주에서 1977 년에 처음 생긴이후, 1988년 IRS로부터 연방 소득세 규정을 위하여 와이오밍 LLC 가 합법적인 회사의 형태로 인정을 받았다.  그후 지속적으로 각 주정부들이 LLC를 인정하기 시작하여 지금은 거의 모든 주에서 LLC를 인정 하고 있다.

LLC  역시 각주에 설립 신청서를  설립비와 함께 제출하여 설립 한다. LLC는 일종의 Partnership 형태의 회사로 회사의 소유주들을 Member라 부르고 Partnership의 Partner 들이 무한책임을 지는 반면에 LLC의 Member들은 유한책임을 지는것이 다른 점이다. Partnership 에서 처럼 Member 들 사이의 관계나 Member 와 회사와의 관계는 계약에 의하여 정해지며 그 계약을 Operating Agreement라 부른다.  회사를 운영하는 사람을 Manager 라 부르고 Manager 는 LLC의 Member 일수도 있고 Member 가 아닐수도 있다.

LLC  의 장점:

LLC 의 연방 소득세 보고는 Partnership 의 Tax보고와 유사하여 회사의 수입과 지출이 by pass하여 Member들의 수입과 지출로 보고되고 회사는 소득세를 내지 않는다.  결국 LLC는 Corp의 유한책임 그리고 Partnership의 이중과세 회피를 동시에 달성할수 있는 좋은 회사의 형태이다.

LLC가 대부분의 주에서 합법적인 회사의 형태로 인정된 것은 정말 최근의 일이지만 빠른 속도로 많은 사람들의 선호의 대상이  되었다.  회사의 사업목적이 부동산 투자및 개발일 경우 특별히 LLC 가 이중과세를 피하기위한 효과적인 회사의 형태로 사용 되였다.  부동산을 파는 시점에서 발생하는 양도 소득이 클경우 Corp.을 사용하면 이중과세를 피하기 어렵기 때문이다.

LLC 의 단점:

세금이 계산 되는 복잡한 과정과 기업의 다양성을 이해하지 못하는 사람들의 눈에는 LLC가 절대적인 선택으로 보일 수있다  그러나 본인은 회계사로써 Client 와 회사설립을 위한 상담을 할  때에 부동산 투자를위한 회사설립을 하는경우를 제외하고는 ,LLC 보다 Corp을 권유하는 경우가 많다.  Client 가 하고자하는 사업의 규모가 작은 경우, LLC 보다 Corp.이 바람직하기 때문이다.  Corp.이 LLC 보다 바람직한 이유는 다음과 같다.

1. LLC 의 회사설립 과정이 Corp. 회사설립 과정보다 복잡하여 설립시간이 길고 비용이 비싸다.
2. 회사의 규모가 작고 주주의 수가 적은 경우 Corp.을 이용하여도 이중 과세를 어렵지않게 피할 수있다.
3. Corp.의 회사 결산일은 대개 회사설립한 달의 전 달의 말일로서 회사의 결산일이 분산되어 있지만, LLC 의 경우 회사의 결산일이 12월 31 일이어서 회계사의 업무가 과중한 시기이며 LLC 의 결산이 끈난후에야 Member 들의 개인 소득세 보고가 가능하다.
4. LLC 의 경우 회사결산에 의한 순수익이나 손실이 Member 들의 개인소득에 즉시 by pass 되기 때문에 개인소득세에서 누진세로인한 불이익을 볼수있다.

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Tax Return Copy

세금 보고는 매년 수입에 대한 세금을 정산하는 중요한 법을 이행하는 행위이며, 그 세금보고 Copy 또한 매우 중요한 서류중의 하나이다.

Tax Return Copy 는 중요한 법률행위를 할 경우(예: 은행융자, 시민권 신청, 영주권 신청등등) 항상 필요하기 때문에 잘 보관하여야 한다.

Tax Return Copy 가 없는 경우 IRS 에 요청하면 Tax Return Transcript 를 받을 수 있다.

To request a tax return transcript through the mail*, individual taxpayers should complete IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Form 4506T-EZ is only for individuals who filed a Form 1040 series return. Businesses, partnerships and individuals who need transcript information from other forms or need a tax account transcript must use the Form 4506T, Request for Transcript of Tax Return. You should receive your tax return transcript within 10 working days from the time the IRS receives your request. Allow 30 calendar days for delivery of a tax account transcript.

If you still need an actual copy of a previously processed tax return, it will cost $57 per tax year and take much longer.  Complete Form 4506, Request for Copy of Tax Form, and mail it to the IRS address listed on the form for your area.  Please allow 60 days for actual copies of your return.  Copies are generally available for the current year as well as the past six years.

어린아이를 위한 보조금에는 child tax credit 과 child care credit 이 있으며 상황에 따라서 한가지 또는 두가지 credit 을 다 받을 수 있다.

Child Tax Credit:

17 세 미만의 아이를 하나 이상 가지고있을 때 한 아이당 $1,000 의 보조금을 받을 수 있다.

Child Care Credit:

13살 미만의 아이가 있고 부부가 모두 일을 할 경우,  아이를 돌보기 위해 다른 사람을 고용하거나 Day Care Center 에 비용을 지불하였을 때, 연방정부와 주정부에서 허용하는 Tax Credit 입니다.  매년 금액이 달라지는데, 한 아이당 $3,000 정도의 비용이 인정되며 수입에 따라 Credit 금액도 달라집니다.  좀 더 자세한 내용은 아래 영문을 참조하시고, 이해되지 않는 점은 E-Mail 로 문의하시기 바랍니다.

.  Here are some important facts you need to know about the eligibility and requirements for this tax credit.

1.   The care must have been provided for qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided.  Also your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons.

2.   The care must have been provided so you and your spouse if you are married filing jointly could work or look for work.

3.   You and your spouse if you are married filing jointly must have earned income from wages, salaries, tips, or net earnings from self-employment or be a full-time student.

4.   The payments for care can only be paid to individuals who are not your spouse or a dependent on your income tax return.  You must identify the care provider(s) on your tax return and indicate the tax id or a social security number, address, and amount paid.  Have the care provider fill out form W-10* and you should keep this form in your records.

5.  Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.

6.  The qualifying person must have lived with you for more than half of the year.  However, there are several exceptions to this rule; if the child was born later in the year or the child has passed away in the beginning of the year, see pub 503* for more details.

7.   For 2009, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

8.   The qualifying care expenses are reduced if you are participating in a dependent care FSA plan through your employer.  You can put aside up to $5,000 a year and this amount is reported on your form W2 line 10.

9.   If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer.  If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax.

Charitable contributions must be made to a qualified charitable organization.  Qualified means that the charity is registered with the IRS and has received a status of qualified organization.  The most common qualified organizations are: non-profits also knows as 501 (c) (3) organization, public charities, religious organizations, (churches, synagogues, etc), schools and etc. You can deduct up to 50% of your AGI (Adjusted Gross Income) and if your charitable donations are in excess of 50%, you may carry it forward to the next year.

You generally can deduct your cash contributions and the fair market value of the property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.

If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet, raffle tickets or other event, you can deduct only the amount that exceeds the fair market value of the benefit received.

Be sure to keep good records of any charitable contribution you make, regardless of the amount.  For any contribution made in cash, you must maintain a record of the contribution such as a bank record like a cleared check or a credit card statement.  For any single contribution of $250 or more, you must have written receipt from the organization in additionto the bank record as explained above.  This written receipt must include: the amount of contribution, description of the contribution and/or market value of the property you donated.  The charitable organization must indicate on the receipt weather any goods or services were provided in exchange.

Only contributions actually made during the tax year are tax deductible.  So if you pledged $500 to a charity in September of this year, but so far this year you paid to the charity only $200, only that $200 you have contributed will be tax deductible on your tax return for this year.

The charitable contribution is realized when you mail a check or charge the credit card.  If you mailed a check on December 31, but the charity doesn’t cash the check until February of next year you are still eligible to deduct the December’s contribution this year even though the charity cashes your check next year.  Include donations with a credit card even though you may not pay the credit card bill until the next year.

Special rules apply to donating a property or items valued at $500 or more.  You must complete additional form for non-cash charitable contributions, and attach it to your tax return.  An appraisal generally must be obtained if you claim a tax deduction for a contribution of non-cash property worth more than $5,000.

For more information see IRS Publication 526, Publication 561, Form 8283

Capital Gains and Losses are recognized when you sell or dispose of an asset (property, stock, bonds, other securities, collectables, etc.)  Here are some facts you should know about capital gains and losses.

• When you sell a capital asset, you should know the original price.  It also referred to as “basis”.  The difference between the amounts you sold it for and your basis is the capital gain or capital loss.  So let’s say you purchased a stock XYZ for $25 (basis) and sold it for $45, you now have $20 of capital gain ($45-$25)

• If it’s an investment related asset (like a Real Estate that you rent out), you may only deduct capital losses on investment property.  So if you had investment capital loses, you will not be able to deduct it on property held for personal use.

• Depending on how long you held the asset before the sale, you might have a short-term or a long-term capital gain or loss. If you hold the asset for more than one year, your capital gain or loss is a long-term and contrary, if you held it one year or less, your capital gain or loss is a short-term.

• You pay different taxes on capital gains.  If it’s a short-term capital gain, your marginal tax rate (your current tax bracket) is used to calculate the tax.  If it’s a long-term capital gain, then different rates apply; from 0% to 20% and in some cases the tax rate can be as high as 28%.  For 2012 for lower-income individuals, the rate may be 0% on some or all of the net capital gains.

• If your personal capital losses are over your capital gains (net capital loss), the excess can be deducted on your individual income tax return form 1040.  Use Schedule D to report your transactions.  Note that you can only deduct the maximum annual limit of $3,000 for married couple filing jointly or $1,500 if you are individual or married filing separately.