Answer:   NO to both.  Interest on a reverse mortgage loan added monthly to the outstanding loan balance as it accrues is neither taxable in a cash method lender’s gross income nor deductible by a cash method borrower at the time it is added.

• The primary purpose of a reverse mortgage loan is to enable elderly persons with limited incomes to remain in their homes.
• Repayment of the loan is due when the principal amount has been fully paid to the borrower (they receive monthly allotments),
• The residence that secures the loan is sold,
• The borrower dies, or the borrower ceases to use the home as the borrower’s principal residence

Generally yes if they are work clothes or uniforms if required and NOT suitable for everyday use.  That deduction would include the cost and upkeep if both requirements are met.

If I purchase a nice suit for business, it is not a deduction as it has alternate use.

If I am a professional clown (no comments please), then the clown suit with the big shoes, etc. would be a deduction.  Yes, It has alternate use but I probably would not use it to go to the mall.

Nor is it enough that you do not, in fact wear your work clothes away from work. The clothing must not be suitable for taking the place of your regular clothing.  www.USATaxHelp.com

• 55 cents per mile for business miles driven (decreases to 50 cents per mile in 2010)
• 24.0 cents per mile driven for medical or moving purposes (decreases to 16.5 in 2010)
• 14 cents per mile driven in service of charitable organizations (same in 2010)

Runzheimer International conducts an annual study of fixed and variable expenses to operate a vehicle.  Please note the Business Mileage Deduction may not be used if a vehicle has been depreciated using MACRS or depreciated using  §179.

2009 example:A Single person’s standard deduction is $5,700.  Add a personal exemption of $3,650.  Total $9,350.  That means on the first $9,350 of income there is no Income Tax liability and NO filing requirement.  If the taxpayer is 65 or older, or blind add another $1,400 to the standard deduction for a total of $10,750.

But it’s not really that simple.  Let’s assume this single person’s only source of income was $1,000 of self employment income.  The Income Tax is zero BUT the return must be filed due to Self Employment Tax liability on Self Employment Income of $400 or greater!

Suppose the person’s self employment income is $200 and that’s all.  Sounds like no filing requirement.  The self employment income bottom line may be only $200, but let’s say the business of the self employed person generated $1,000,000 in sales with enough expenses to generate only a $200 profit. 

YES, there is a filing requirement!  Think about it.. a million dollars passing through a self employed person’s hand should be accounted for.  

Cost Segregation is a VERY BENEFICIAL tax angle used by real estate owners to ACCELERATE DEPRECIATION deductions.

In the past it was primarily used by large accounting firms and larger clients.  The ability for smaller building owners to utilize these techniques is now becoming popular.

It takes an engineering study and an accounting firm that understands the issues.

Generally here is how it works…..

An engineering study is completed to identify components in a buiding that can be depreciated over 5, 7 and 15 years instead of 39 years for commercial property and 27.5 for residential property.

We then prepare what is called an ACCOUNTING CHANGE and the prior year(s) of lower depreciation are now adjusted in one year!

This is alot of paperwork but it is often worth it.  You are welcome to contact us if you have questions www.USATaxHelp.com

Tax Court Case O’Donnabhain (2010), 134 TC No. 4 The Tax Court has held that an individual could deduct as a medical care expense under Code Sec. 213 amounts paid for hormone therapy and sex reassignment surgery that were incurred in connection with a condition known as gender identity disorder, which the Tax Court found to be a disease. However, it found that breast augmentation surgery that the individual also had in connection with the disorder was cosmetic surgery and amounts paid for it were not deductible under Code Sec. 213(d)(9).

The math is simple BUT we forsee a few problems.  Since the check is probably directly deposited, many taxpayers are going to say “don’t know if I received it”.  YUP, that’s what they will say.  Then the question is, how do we know for sure when preparing a return (and trying to avoid preparer penalties)……

IRS instructions say if you “if you do not know” you should personally contact the Social Security or the paying agency.  IRS nor Social Security has any electronic link to obtain this information (we had a link for the Economic Stimulus Rebate in 2009 for 2008).

Here is a link to more specific information on the IRS website Making Work Pay Questions and Answers: Economic Recovery Payments

For 2009, if your filing status is Single, Head of Household or Married filing separate, the phase out of the credit begins at $75,000 and ends at $95,000.  That means if you made less than $75k, you get the whole $400.  If you made $95k, you get none.

If your filing status if Married Filing Joint, the phase out begins at $150k and ends at $190k.

We do not know at this time whether the AGI restrictions will be exactly the same for 2010.

You MAY have already received up to $250 of the credit if you are a recipient of Social Security, SSI, railroad retirement, Veteran’s disability compensation or pension benefits.

 If you know for sure you are continuing, then the “S” corp election for the LLC is usually an excellent decision.  Seriously, read the two handouts on our main website for “S” Corps and LLC’s at www.USATaxHelp.com