Tax Doctor Questions - Deductions & Business Expenses.
April 4, 2017
1. I noticed on your company page that we have 14 days left until Tax Day. I have requested for a federal extension online. Does that same extension automatically apply to my state return too, or will I have to request a state filing extension as well?
Most states don’t require you to file separate state extension forms if you don’t owe any additional taxes. When you file your state return, you only need to attach a copy of your federal extension form. If you owe state tax, you typically must file state tax extension to avoid penalties. Contact your state tax office to verify the state extension requirements and to get the extension form.
2. How is the IRS compensating Louisiana Flood victims?
Once the Great Flood of Louisiana was declared a national disaster the federal government allowed tax payers to amend their 2015 tax returns to add the damages incurred from the flood.
3. My mother is in a nursing home and I pay for the entire cost. Can I deduct these expenses on my tax return?
Yes, in certain instances nursing home expenses are allowable as medical expenses.
If you or someone who was your spouse or your dependent, either when the service was provided or when you paid them, is in a nursing home primarily for medical care, then the entire cost including meals and lodging is deductible as a medical expense.
If the individual is in the home mainly for personal reasons, then only the cost of the actual medical care is deductible as a medical expense, not the cost of the meals and lodging.
4. I am a small business owner what Tax credit can I receive for Health Care?
The small business health care tax credit benefits employers that:
Have fewer than 25 full-time equivalent employees
Pay average wages of less than $50,000 a year per full-time equivalent. For tax years 2015 and 2016, the inflation-adjusted amount is $52,000
Pay at least half of employee health insurance premiums
To be eligible for this credit, you must have purchased coverage through the small business health options program, also known as the SHOP marketplace. For information about insurance plans offered through the SHOP Marketplace, visit Healthcare.gov.
5. As a business owner, what expenses can I deduct?
To be deductible business expense it must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. It is important to separate business expenses from the following expenses:
The expenses used to figure the cost of goods sold,
Capital Expenses, and
Personal Expenses.
6. Tax Doctor this is my first year filing as a business owner, will you explain these Types of Business Expenses: Employees’ pay, retirement plans, rent expense, interest, taxes and insurance.
Employees' Pay - You can generally deduct the pay you give your employees for the services they perform for your business.
Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees' retirement.
Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.
Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.
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