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Local Lodging Expenses May Be Deductible

The IRS has issued final regulations regarding the deductibility of local lodging expenses. In the past, employees were able to deduct expenses for job travel away from home, but could not deduct lodging expenses for the cost of staying in the locality where they work (local lodging). However, in 2007 the IRS announced that the regulations would be amended to change the treatment of local lodging. The Service also stipulated that until the amendment took place, an employee’s deduction for local lodging would be allowed if the lodging was temporary and necessary for participation in a business function of the employer. The final regulations, adopt with some modifications, the proposed regulat

Independent Contractor vs. Employee

INTRODUCTORY PARAGRAPHS TO BE USED FOR ALL CRITERIA Currently, the likelihood of your business being involved in a worker classification or employment tax audit is increased because the IRS is aggressively attempting to reduce the “tax gap,” which is the annual shortfall between taxes owed and taxes paid. Because the existing worker classification rules are complex and ambiguous, much uncertainty surrounds their interpretation and application. The lack of a single, definitive test for classifying workers as either employees or independent contractors contributes significantly to the worker classification problem. USE FOR ENTITIES WHO PAID INDEPENDENT CONTRACTORS – CRITERION 1, 2, OR 3 Theref

Home Office Deduction - Introducing a Simplified Option

The home office deduction rules are among the most complex in the Tax Code and are strictly enforced by the IRS. On January 15, 2013, the IRS announced a new simplified option (also known as a safe harbor method) to calculate the home office deduction. The simplified option, at this time, is capped at $1,500 per year based on $5 a square foot up to 300 square feet. It is important to weigh the benefits of using the new simplified option against computing the home office deduction under the regular Tax Code rules. Regular rules Individuals who use part of their personal residences for business may be able to deduct expenses for the business use of their home. This is known as the home office

Home-Office Deduction: General Opportunities

If you work out of your home, you are part of a growing trend. What's important to you, however, is that you may qualify for some valuable federal income tax deductions. You may be able to deduct part of your home's normal operating expenses for items such as utilities and insurance, you may be able to claim write-offs for depreciation or lease payments, depending on whether you own or rent, and you may even get some extra business car deductions. The tax-saving opportunities available to you will depend not only on the type of work you do at home, but where in the home you perform it. You won't get any home-office-type deductions unless you regularly and exclusively use a room or specific a