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Tax Lesson 12 - Job Expenses and other items
In this topic you will learn which expenses you can claim as miscellaneous itemized deductions. You will cover which expenses are subject to the 2% limit and which expenses are not. You will also learn which expenses you cannot deduct and how to report the expenses that are deductible. For example, some of the expenses that are deductible are unreimbursed employee expenses that are incurred during the year and that are ordinary and necessary.

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Student Instructions:

Print this page, work on the questions and then submit test by mailing the answer sheet or by completing quiz online.

Instructions to submit quiz online successfully: Step-by-Step check list

Answer Sheet            Quiz Online

Most forms are in Adobe Acrobat PDF format. Get Adobe ReaderYou will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

 

Use IRS Publication 529  to complete this topic.

Complete a Form 2106 for Dave (553-55-6789). He is a painter and works for a company that caters to large homes in the community.

Then, complete a  Schedule A, Form 1040.

Expenses:

bullet Union Dues                                        $503.00
bullet Tax preparation fees                          $955.00
bullet Safe deposit box at bank                     $50.00 (to keep his jewelry safe)
bullet His total actual gas expenses             $3,200.00
bullet Parking while at a work site                $150.00
bullet DMV vehicle license tax (2008 dodge)         $326.00
bullet DMV vehicle license tax (1992 ford p-up)     $90.00
bullet Gambling losses*                                   $800.00
bullet Costs of meals while working late        $150.00
bullet Check writing fees for 2008                $90.00
bullet Speeding ticket (fine) while driving for work $430.00
bullet His lunches with co-workers while at work *** $980.00 (lunch with co-workers whilst talking about work improvements).

*According to his gambling diary, Dave had a total of $800 in gambling losses. He had no winnings in tax year 2008.

His profession requires special white uniforms consisting of a white cap, white shirt (or jacket for cold weather), white bib overalls, and white work shoes required by his union to wear on the job. The following is the itemized list of expenses.

bullet 4 white caps with Company logo imprinted......$25.00 each.
bullet 8 white shirts with company logo imprinted......$48.00 each.
bullet 4 white bib overalls with company logo imprinted..$46.00 each.
bullet 5 painter pants not suitable for regular use.......$26.00 each.
bullet 2 pairs of white Nike shoes.............$75.00 each pair.
bullet Cleaning/ laundry of work clothes..... $530.00

Dave paid a total of $ 9, 600 in rent for his 1 bedroom apartment for 2008.

Dave used his automobile (2002 Ford Pick-up) for his job and used a total of 23,000 miles for the whole year. He started using his car car for work on January 1, 2008. His daily roundtrip miles are about 15 per day for a total of 5,400 for the whole year.  Other miles were 2,600. He totaled 15,000 miles that were qualified work related miles. 7,500 miles from January 1, 2008 through June 30, 2008 and 7,500 miles from July 1, 2008 through December 31, 2008. He sometimes uses this pick-up truck to help his friends when they are moving. He kept a detailed record of his miles to and from work and his miles used at work to and from jobs.

He has another car (2008 Dodge Ram) that he purchased in November of 2007. He does not use this car for his job. 

In addition to his earnings from work, Dave had the following:

bullet Interest income from Bank        $ 672.00
bullet Unemployment compensation    $ 125.00

Dave also had educational expenses. He is trying to become a real estate agent.  His total investment was the following:

bullet books and supplies                          $ 370.00
bullet registration in real estate class        $ 499.99

In addition, Dave has resume printing and distributing costs for a total of $ 120.00 to land him a job in his new chosen real estate career.

 Mr. Bolayog is not married and has no children. All information on the following W-2 is current.

 

 

 

1. Look at the Form 1040 you prepared for Dave. What is the amount on Form 1040, Line 40?

A. $ 13,003.
B. $ 10,503.
C. $ 11,353. 
D. $ 12,225.

2. Look at the Form 1040 you prepared for Dave. What is the amount on Form 1040, Line 73a?

A. $ 1,482.
B. $ 1,730.
C. $ 1,355. 
D. $ 1,635.

3. You can deduct certain expenses as miscellaneous itemized deductions on

A. Schedule C (Form 1040).
 B. Schedule F (Form 1040).
 C. Schedule A (Form 1040).
 D. Any of the above.

4. You make a bona fide loan to a corporation you work for. The corporation fails to pay you back. You had to make the loan in order to keep your job. You

A. Don't have a business bad debt.
 B. Have a business bad debt as an employee.
 C. Shouldn't be making loans to your employer as that is a very good sign that they won't pay you your salary.
 D. None of the above.

5. If you break an employment contract, you can deduct damages you pay your employer if the damages are not attributable to the pay you received from that employer.                      

True False

6. You can deduct only un-reimbursed employee expenses that are 

A. Paid or incurred during the year.
 B. For carrying on your trade or business of being an employee.
 C. Ordinary and necessary.
 D. All of the above.

7. You may be able to deduct the following items as un-reimbursed employee expenses, except

A. Business bad debt of an employee.
 B. Malpractice insurance payments.
 C. Passport for a personal trip.
 D. None of the above.

8. You can claim a depreciation deduction for a computer or cell phone that you use in your work as an employee if its use is

A. For the convenience of your employer.
 B. Required as a condition of your employment.
 C. For a substantial business reason of your employer.
 D. All of the above.

9. To claim a depreciation deduction for a computer or cell phone it is enough that your employer merely states that your use of the item is a condition of your employment.            

True False

10. You are an engineer with an engineering firm. You occasionally take work home at night rather than work late at the office. You own and use a computer that is similar to the one you use at the office to complete your work at home. You

A. Can claim a depreciation deduction because you use the computer for work.
 B. Cannot claim a depreciation deduction.
 C. Can have your employer claim a depreciation deduction and later reimburse you for it.
 D. None of the above.

11. You can deduct amounts you spend for preparing and mailing copies of a resume to prospective employers if you are looking for a new job in a new occupation.  

True False

12. You can deduct certain expenses you have in looking for a new job in your present occupation, even if you do not get a new job. You cannot deduct these expenses if

A. You are looking for a job in a new occupation.
 B. There was a substantial break between the ending of your last job and your looking for a new one.
 C. You are looking for a job for the first time.
 D. Any of the above.

13. If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule for deducting temporary travel expenses. This means that you may be able to deduct travel expenses even if you are away from your tax home for more than one year. To qualify, the attorney general must certify that you are traveling

A. For the federal government.
 B. In a temporary duty status.
 C. To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime.
 D. All of the above.

14. You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Your diary of winnings and losses should contain at least

A. The date and type of your specific wager or wagering activity and amounts won or lost.
 B. The name and address or location of the gambling establishment and the amount you won or lost.
 C. The names of others present with you at the winning establishment.
 D. All of the above.

15. If you were an educator in 2008 and you had qualified expenses that you cannot take as an adjustment to gross income, you can deduct the rest as an itemized deduction subject to the 

A. 4% limit.
 B. 5% limit.
 C. 1% limit.
 D. 2% limit.

16. If you use a part of your home regularly and exclusively for business purposes, you may be able to deduct a part of the operating expenses and depreciation of your home. The regular and exclusive business use must be for the convenience of your employer and not just appropriate and helpful in your job. You can claim this deduction for the business use of part of your home only if you use that part of your home regularly and exclusively

A. As your principal place of business for any trade or business.
 B. As a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business.
 C. In case of a separate structure not attached to your home, in connection with your trade or business.
 D. Any of the above.

17. You were blind and you must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You

A. Cannot deduct your services for the reader as impairment-related work expenses.
 B. Can deduct your services for the reader only during your regular working hours.
 C. Can deduct your services for the reader as impairment-related work expenses for all working hours.
 D. None of the above.

18. You can deduct the cost and upkeep of work clothes if the following requirement is met.

A. You must wear the clothes as a condition of your employment.
 B. The clothes are not suitable for everyday wear.
 C. Uniforms are not suitable for taking the place of your regular clothing.
 D. All of the above.

19. When deducting expenses you incur in looking for a new job, the job you are looking for must be

A. In a different occupation.
 B. In your tax home.
 C. In your present occupation.
 D. All of the above.

20. You can deduct expenses you have for education, even if the education may lead to a degree, if the education

A. Maintains or improves skills required in your present work.
 B. Is required by your employer or the law to keep your salary, status, or job, and the requirement serves as business purpose of your employer.
 C. Is not to meet the minimum educational requirements to qualify you in your work or business.
D. All of the above.

 
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