Question 1

Alexis (a CPA) sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national accounting firm. Her moving expenses are not deductible because she has changed employment status (i.e., went from self-employed to employee).

Accepted Answer

Alexis may be able to deduct her moving expenses under certain circumstances, even though she changed employment status. The IRS allows individuals to deduct expenses related to a job relocation if the new job is located at least 50 miles further from their old home than their previous job location. Additionally, the individual must meet a time test where they must work full-time in the new location for at least 39 weeks during the 12 months following the move. Therefore, if Alexis meets these requirements, her moving expenses may be deductible.

Question 2

In November 2017, Katie incurs unreimbursed moving expenses to accept a new job. Katie cannot deduct any of these expenses when she timely files her 2017 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The answer of In November 2017, Katie incurs unreimbursed moving...

Question 3

An education expense deduction may be allowed even if the education results in a promotion or pay raise for the employee.

Accepted Answer

According to the IRS, an education expense may be deductible if it maintains or improves skills required in your current job, or if it is required by your employer or by law to keep your salary, status, or job. Therefore, if the education leads to a promotion or pay raise, it would still be deductible as long as it meets the other requirements.

Question 4

A taxpayer who lives and works in Tulsa travels to Buffalo for five days. If three days are spent on business and two days are spent on visiting relatives, only 60% of the airfare is deductible.

Accepted Answer

The entire cost of the airfare is deductible because the primary reason for the trip is business. The days spent visiting relatives do not affect the deductibility of the transportation costs.

Question 5

In May 2017, after 11 months on a new job, Ken is fired after he assaults a customer. Ken must include in his gross income for 2017 any deduction for moving expenses he may have claimed on his 2016 tax return.

Accepted Answer

The answer of In May 2017, after 11 months on...

Question 6

A taxpayer who lives and works in Kansas City is sent to Chicago on an eight-day business trip. While in Chicago, taxpayer uses the hotel valet service to have some laundry done. The valet charge is a nondeductible personal travel expense.

Accepted Answer

The valet charge for laundry during a business trip is considered a deductible business travel expense, as it is necessary for maintaining a professional appearance while conducting business activities.

Question 7

A moving expense deduction is allowed even if at the time of the move the taxpayer did not have a job at the new location.

Accepted Answer

According to IRS guidelines, a taxpayer may claim the moving expense deduction regardless of whether they have a job lined up at the new location. However, they must meet certain distance and time tests, as well as other eligibility requirements.

Question 8

There is no cutback adjustment for meals and entertainment as to employees who are subject to regulation by the U.S. Department of Transportation.

Accepted Answer

The answer of There is no cutback adjustment for meals...

Question 9

At age 65, Camilla retires from her job in Boston and moves to Florida. As a retiree, she is not subject to the time test in deducting her moving expenses.

Accepted Answer

The Tax Cuts and Jobs Act of 2017 suspended the deduction for moving expenses for most taxpayers, including retirees, from 2018 through 2025, except for active-duty military members.

Question 10

Sick of her 65 mile daily commute, Edna purchases a condo that is only four miles from her job. Edna's moving expenses to her new condo are not allowed and cannot be claimed by her as a deduction.

Accepted Answer

Moving expenses are generally not deductible for personal reasons such as reducing commute time.

Question 11

Lloyd, a practicing CPA, pays tuition to attend law school. Since a law degree involves education leading to a new trade or business, the tuition is not deductible.

Accepted Answer

According to the IRS Publication 970, education expenses incurred to maintain or improve skills required in one's current business or profession may be deductible. However, education expenses incurred to meet the minimum education requirements of a new trade or business are not deductible. Since Lloyd is paying tuition to attend law school, which is not related to his current profession as a CPA, the tuition expenses may be deductible as expenses incurred for education leading to a new trade or business.

Question 12

Liam just graduated from college. Because it is his first job, the cost of moving his personal belongings from his parents' home to the job site does not qualify for the moving expense deduction.

Accepted Answer

The answer of Liam just graduated from college. Because it...

Question 13

After completing an overseas assignment in Oslo (Norway), Daniel retires from Pelican Corporation and moves to a retirement community in Key West (Florida). Daniel's moving expenses from Oslo to Key West are deductible as they are exempt from the time test.

Accepted Answer

Moving expenses are generally deductible if the move is closely related to the start of work at a new location and meets the distance and time tests. However, if an individual retires after an overseas assignment, the time test is waived, and the moving expenses become deductible. Therefore, Daniel's moving expenses from Oslo to Key West are deductible even though he did not meet the time test.

Question 14

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Accepted Answer

According to the IRS, to deduct travel expenses, a taxpayer must be traveling away from home for business purposes. However, if the period of employment in a single location exceeds one year, it is considered indefinite, and the location becomes the taxpayer's new tax home, making any travel expenses nondeductible.

Question 15

Bob lives and works in Newark, NJ. He travels to London for a three-day business meeting, after which he spends three days touring Scotland. All of his air fare is deductible.

Accepted Answer

Bob's air fare for the entire trip, including the three-day business meeting and the three-day tour of Scotland, is considered a business expense and is therefore deductible.

Question 16

Qualified moving expenses include the cost of lodging but not meals during the move.

Accepted Answer

According to the IRS, lodging expenses are considered a qualified moving expense, but meals are not.

Question 17

Under the right circumstances, a taxpayer's meals and lodging expense can qualify as a deductible education expense.

Accepted Answer

If a taxpayer is traveling for educational purposes, such as attending a conference, the cost of meals and lodging can be considered a deductible education expense. However, certain conditions must be met, such as the travel being primarily for educational purposes and not for personal reasons. It is always recommended to consult with a tax professional for specific advice and guidance regarding education expense deductions.

Question 18

Kelly, an unemployed architect, moves from Boston to Phoenix to accept a job as a chef at a restaurant. Kelly's moving expenses are not deductible because her new job is in a different trade or business.

Accepted Answer

Kelly's moving expenses may be deductible even if she is changing professions, as long as she meets the distance and time tests and the new job is in the same general field or industry as her old job. However, it is important to note that the tax laws surrounding moving expenses changed in 2018, and the deduction is now only available in certain specific circumstances.

Question 19

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

Accepted Answer

Qualified moving expenses of an employee that are not reimbursed are deductible as an adjustment to income on the taxpayer's Form 1040. This means they are deducted before calculating the taxpayer's adjusted gross income (AGI).

Question 20

Eileen lives and works in Mobile. She travels to Rome for an eight-day business meeting, after which she spends two days touring Italy. All of Eileen's airfare is deductible.

Accepted Answer

Since Eileen's travel to Rome is for business purposes, her airfare is deductible. The extra two days she spends touring Italy do not affect the deductibility of her airfare.

Quiz 9: Deductions: Employee and Self-Employed-Related Expenses