Tax Topic 8 - Tax Deduction for Job Expenses and other items

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

A. $13,003.
B. $11,528.
C. $11,353. 
D. $12,225.

2. Look at the Form 1040 you prepared for Dave. What is the amount on Form 1040, Line 43?

A. $20,288.
B. $35,466.
C. $23,938. 
D. $0.

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 she 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 2009 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. 2% limit.
B. 5% limit.
C. 1% limit.
D. 4% 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 new occupation.
B. In your tax home.
C. In your present occupation.
D. Your job for the first time.

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.

21. You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with

A. Either doing or keeping your job, such those you paid to defend yourself against criminal charges arising out of your trade or business.
B. The determination, collection, or refund of any tax.
C. Tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or those expenses that you pay in connection with collecting taxable alimony.
D. Any of the above.

22. You can generally deduct up to $25 of business gifts you give to any one individual during the year. This $25 limit does not apply if the gifted items are

A. Identical, widely distributed items costing $ 4 or less that have your name clearly and permanently imprinted.
B. Signs, racks, and promotional materials to be displayed on the business premises of the recipient.
C. Both A and B above.
D. Champagne bottles that are customary around the new year holidays.

23. Martha works as a laboratory technician in a local hospital. She is considering returning to her former occupation of a bookkeeper. If she takes a computer course to refresh her skills in a specific computer bookkeeping system,

A. She can deduct the cost of the course because she has already met the minimum education requirements of the bookkeeper job.
B. She cannot deduct the cost of the course because although she has met the minimum education requirements for the bookkeeping job, she is not presently working as a bookkeeper.
C. She can deduct the cost of the course because the course is required by her employer to work as a bookkeeper.
D. None of the above.

24. You can deduct the cost and upkeep of work clothes if you wear them as a condition of your employment and they are not suitable for everyday wear. It is not enough that you wear distinctive clothing. The clothing must be specifically required by your employer. Nor is it enough that you do not, in fact, wear your clothes away from work. Clothing 

A. Worn by a welder at the request of a foreman are deductible.
B. Can be suitable for taking the place of your regular clothing.
C. Must not be suitable for taking the place of your regular clothing.
D. Consisting of white cap, white shirt or white jacket, white bib overalls, and standard work shoes, such kind that painters wear are deductible.

25. Which of the following is reduced by the 2% limitation on miscellaneous deductions?

A. Tax preparation fee.
B. Un-reimbursed employee expenses.
C. Other expenses that go on Schedule A line 23.
D. All of the above.

26. You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You can also deduct items as miscellaneous itemized deductions that are not subject to the 2% limit. The following expense is not deductible in either case.

A. Lobbying expenses.
B. Investment-related seminars.
C. Gambling losses.
D. Only A and B above. 

27. In which situation would local transportation expenses NOT be deductible?

A. Transportation between your home (residence) and your main or regular place of work.
B. Transportation between the regular or main job and a temporary work location.
C. Transportation between the second job and a temporary work location.
D. Transportation between the regular or main job and the second job.

28. If you play the slot machines in a casino you must keep a record of the machine number and all winning by date and time the machine was played. You must report the full amount of your winnings for the year on Form 1040, line 21. You deduct your losses for the year on Schedule A (Form 1040), line 28. You

A. Can report your deductions on line 20 through 22 of Schedule A (Form 1040).
B. Cannot deduct gambling losses that are more than your winnings.
C. You can reduce your gambling winnings by your gambling losses and report the difference.
D. Both A and B above.

29. Debra Smith is employed as a salesperson. However, she is not a statutory employee. Her adjusted gross income is $55,000, and she did not receive any reimbursement for her expenses. She has the following qualifying miscellaneous expenses for 2009:

What is the total that would be deductible by Debra on Schedule A?

A. $400.00
B. $700.00
C. $0.
D. $200.00

30. If you are an employee, you generally must complete Form 2106 (or 2106-EZ) to deduct your travel, transportation, and entertainment expenses. Generally, you cannot deduct travel expenses paid or incurred in connection with

A. A definite work assignment.
B. A temporary work assignment.
C. An indefinite work assignment.
D. None of the above.

31. Generally, you can deduct amounts you spend for tools used in your work if the tools

A. Wear out and are thrown away within 1 year from the date of purchase.
B. Have a useful life beyond a year.
C. Don't wear out and last for a long time.
D. None of the above.

32. You can deduct ______ of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's "hours of service" limits.

A. 20%.
B. 80%.
C. 50%.
D. 100%.

33. You can deduct expenses incurred in going between your home and a temporary work location if

A. The work location is outside the metropolitan area where you live and normally work.
B. You have at least one regular work location (other than your home) for the same trade or business.
C. Either A or B above.
D. You consider the distance between your home and the temporary work location as this also matters.

34. You cannot deduct expenses incurred in going between your home and a workplace if your home is your principal place of business for the same trade or business.

True False

35. You can deduct ______ of your business-related meal and entertainment expenses unless the expenses meet certain exceptions.

A. 20%.
B. 80%.
C. 50%.
D. 100%.

36. You cannot deduct expenses you have for education if the education is needed to meet the minimum educational requirements to qualify you in your trade or business, or

A. Is part of a program of study that will lead to qualifying you in a new trade or business.
B. Is part of a program of study that will lead to complying with your continuing educational requirements to keep your professional status active.
C. Is education needed to advance to a higher position in your profession.
D. Is education that qualifies as long as you do not intend to enter that trade or business.

37. A French language teacher can deduct the cost of travel to France to maintain his general familiarity with the French language and culture as an educational expense.

True False

38. The 2009 rate for business use of a vehicle is

A. 25 cents per mile.
B. 55 cents per mile.
C. 35 cents per mile.
D. 65 cents per mile.

39. Generally, you can deduct the cost of membership in any club organized for

A. Business, pleasure, recreation, or other social purpose.
B. Conducting entertainment activities for members or their guests.
C. Providing members or their guests with access to entertainment facilities.
D. None of the above.

40. You cannot deduct commuting expenses. If you haul tools, instruments, or other items in your car to and from work, you can deduct

A. Only the additional cost of hauling the items, such as the rent on a trailer to carry the items.
B. Your mileage or your actual expenses of commuting to work only for the day that you have to haul the items.
C. None of the expenses because you have to commute to work anyways.
D. You mileage or your actual expenses everyday as long as you carry the tools or equipment in your vehicle.

41. You can deduct health spa expenses if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer.

True False

42. You apply the 50% of your business-related meal and entertainment expenses limit after you apply the 2%-of-adjusted-gross-income limit.

True False