any accountants out there that i can ask a question?

[Help]

Is buying a new suit for work considered a business expense?

No.
The clothing must not be suitable for taking the place of your regular clothing.
So only hardhats, scrubs, etc.

[yitzgar]

For the childcare credit. Is it specifically the first 6k that can be used for the deduction?
I had childcare expenses of over 10k but have an employer FSA for the 5k. Can I now get a deduction for the remaining 5k or just 1k?

[Help]

For the childcare credit. Is it specifically the first 6k that can be used for the deduction?
I had childcare expenses of over 10k but have an employer FSA for the 5k. Can I now get a deduction for the remaining 5k or just 1k?

1k. (It’s a credit, not a deduction BTW.)

Note, If your tax bracket is less than the credit (at least 20% of the expenses depending on your income), consider not using the FSA.

In other words, if you’re married filling jointly making 85k, by using $6k from a FSA for child care your are saving $720. (12% which is your tax bracket). But if you chooses to pay outright for it, you will be saving $1,200. (20% which is the amount of the child care credit).

Keep in mind, get advice from your accountant as
a) You might not be eligible for the credit. (Generally, both spouses have to work)
b) You might have other non refundable credits wiping out your entire liability, which makes this credit useless.

[yitzgar]

1k. (It’s a credit, not a deduction BTW.)

Note, If your tax bracket is less than the credit (at least 20% of the expenses depending on your income), consider not using the FSA.

In other words, if you’re married filling jointly making 85k, by using $6k from a FSA for child care your are saving $720. (12% which is your tax bracket). But if you chooses to pay outright for it, you will be saving $1,200. (20% which is the amount of the child care credit).

Keep in mind, get advice from your accountant as
a) You might not be eligible for the credit. (Generally, both spouses have to work)
b) You might have other non refundable credits wiping out your entire liability, which makes this credit useless.

Thanks, very informative.

[Help]

Note, If your tax bracket is less than the credit (at least 20% of the expenses depending on your income), consider not using the FSA.

In other words, if you’re married filling jointly making 85k, by using $6k from a FSA for child care your are saving $720. (12% which is your tax bracket). But if you chooses to pay outright for it, you will be saving $1,200. (20% which is the amount of the child care credit).

Keep in mind, get advice from your accountant as
a) You might not be eligible for the credit. (Generally, both spouses have to work)
b) You might have other non refundable credits wiping out your entire liability, which makes this credit useless.

Edit. This is not accurate as FSA also reduced your FICA taxes which is 7.5%. (unlike 401k contributions which only reduces income tax). So if you’re in the 12% bracket it’s a 19.5% saving. Essentially the same as the tax credit.

[av83]

I purchased lumber for a deck (contractor placed order and I gave my CC), The lumberyard is charging sales tax(NJ). Isn't it exempt since its a capital improvement?

[yitzgar]

Edit. This is not accurate as FSA also reduced your FICA taxes which is 7.5%. (unlike 401k contributions which only reduces income tax). So if you’re in the 12% bracket it’s a 19.5% saving. Essentially the same as the tax credit.

Right, but it also reduces state and local taxes where I am

[yosefsv]

I purchased lumber for a deck (contractor placed order and I gave my CC), The lumberyard is charging sales tax(NJ). Isn't it exempt since its a capital improvement?

Its not tax exempt, but probably should be paid by the contractor. (unless if the contract was to pay him just for the labor)
If you buy supplies at a store or online you will still have to pay taxes on them even if you use them to permanently improve your home.
The contractor can't charge you sales tax for capital improvements (if you fill out the required form), but he pays sales tax on the material.

From the instructions on form ST-8:
"To the contractor: If you enter into a contract to add to or improve real property by an exempt capital improvement and the property owner issues to you a properly completed Certificate of Exempt Capital Improvement, which you must retain, you should not collect Sales Tax from the property owner.(You are required to pay Sales Tax to your supplier on the purchase of the tangible personal property you purchase for use in performing the contract irrespective of whether the work constitutes a repair or a capital improvement.)
However, if you enter into a contract to repair, maintain, or service real or tangible personal property, or to install a taxable capital improvement, you must collect tax on the charge for labor or services performed in accordance with the contract."

[buchir]

Edit. This is not accurate as FSA also reduced your FICA taxes which is 7.5%. (unlike 401k contributions which only reduces income tax). So if you’re in the 12% bracket it’s a 19.5% saving. Essentially the same as the tax credit.

Consider that 6.2% of your 7.65% in FICA taxes goes towards your retirement SSA (especially if you’re in the lower income brackets), and you’re losing your employer's 6.2% contribution towards your SSA retirement.

[buchir]

Right, but it also reduces state and local taxes where I am

If you’re paying state and local taxes, there are probably state and local dependent care credits to take on your return.

[yitzgar]

If you’re paying state and local taxes, there are probably state and local dependent care credits to take on your return.

Not really

[Help]

Not really

Some states give you a % of your federal credit. NJ does.

[yitzgar]

Some states give you a % of your federal credit. NJ does.

Not Ohio

[elimmm]

whats the best way to do this: i had to make a purchase on my cc for someone else (for family, done this way for specific reason- please dont comment on this part of post!!)
 how should they pay me back? check? zelle?...  i dont want the large deposits to my bank acct to trigger flgs/audits. (is my premise correct, that a few large deposits may cause unwanted attention from uncle sammy?

[ckmk47]

whats the best way to do this: i had to make a purchase on my cc for someone else (for family, done this way for specific reason- please dont comment on this part of post!!)
 how should they pay me back? check? zelle?...  i dont want the large deposits to my bank acct to trigger flgs/audits. (is my premise correct, that a few large deposits may cause unwanted attention from uncle sammy?

Would it be a red flag if the relative paid the credit card directly?  then it wouldn't go through his bank account at all.

[elimmm]

Would it be a red flag if the relative paid the credit card directly?  then it wouldn't go through his bank account at all.

usually that becomes a red flag for the CC company
i think chase can shut you down for third party checks

[elimmm]

usually that becomes a red flag for the CC company
i think chase can shut you down for third party checks

so back @ the accountants:
 -did u have clients getting audited for large deposits in excess of their income (into personal accounts) which were really reimbursements from family or similar...
 -are these typically desk audits? simple to "answer up" such questions in an audit?      thanks!

[Mareh Makom]

Anyone have a number of an honest accountant that i can call to ask a tax question? ( possibility of using him to file taxes)

[YoelFried]

Anyone have a number of an honest accountant that i can call to ask a tax question? ( possibility of using him to file taxes)

honest accountant

[brotha123]

Hoping someone could help.
I received a letter from the IRS to verify my identity for an old tax return.
It was filed a few years late but still hasn’t been “processed” because I haven’t verified yet.
When I called today I answered all the questions, but the representative claimed my address I was giving for the return was incorrect. I looked over the tax return 10 times and only have 1 address on it and that’s what I gave her -also  that’s where I received the verification letter as well.
Does anyone have any idea what could be going on?
I recently updated my address for this years return but there’s no reason that this should affect my 2018 return … am I missing something ??
TIA