NYSSCPA Members Offer Free Tax Advice

By:
RICHARD J. KORETO
Published Date:
Feb 24, 2014

Continuing a long tradition, Society members are once again are sitting on tax advice panels at various newspaper offices around the state. In mid-February, members gathered at the offices of Newsday to take questions that ranged from simple yes/no situations to highly complicated scenarios that would require further investigation. Sometimes the CPAs gave welcome news, and sometimes disappointing news, but they always left the taxpayers more enlightened.

Questions ranged from the specific to general. One taxpayer wanted to know if expenses incurred for being a "foster parent" to a dog entitled him to a tax deduction. Absolutely. If the organization running the program was a registered domestic nonprofit, the questioner could deduct unreimbursed expenses as charitable contributions, said the CPA.

On a broader level, one teacher asked if there were any specific breaks for those in her profession. Yes, there were: $250 in unreimbursed expenses can be claimed as an adjustment. Any additional expenses are considered unreimbursed job expenses. You can deduct only the part of these expenses that exceeds 2 percent of the amount on Form 1040, line 38, she was advised.

Those two questions involved relatively minor amounts, but some taxpayers had thousands riding on the answer. A homeowner had to sell a house he bought in 2009 for $478,00 for $455,000, taking a loss—and that's not counting the improvements he had made. It was a regular sale—not a short sale. He wanted to know if he could claim that loss to offset gains from sales of investments made in the same year. It would be a neat plan—if it were true. But no, the CPA told him: a loss on the sale of a personal residence is not deductible and cannot be offset against gains on investments. 

Also in the department of wishful thinking was the taxpayer who hoped to deduct clothing expenses because his office had a new dress code that forced him to update his wardrobe. He was out of luck, noted the CPA: the expenses for clothing for work are deductible only if they are a uniform and/or cannot be used for normal wear. He cited the so-called Dinah Shore rule: the TV hostess wore gowns on her variety show and tried to deduct them. The IRS ruled that the gowns could be worn outside of work and the cost of this clothing was non-deductible. (Shore ultimately prevailed, arguing she wore dresses that did not permit her to sit, making them ineligible for normal use and thus deductible.)

Some had clear answers, but the details required addition consultation: One taxpayer said she had a live-in housekeeper who got her room for free in exchange for her cleaning services. Since no actual cash changed hands, how should this arrangement be reported? Did it need to be reported at all? Yes, said the CPA, the value attributable to her services and her living with the homeowner would be reportable as income to her. But the details were complex, so the questioner was advised to consult a qualified tax advisor.

In the same category was a new bride who wanted to know if "married filing jointly" with her husband was required. Married couples do share many things, but tax returns don't have to be one of them. They can file separately, but were advised that in most circumstances, joint filing was more advantageous. Should they file separately and have a child someday, however, only one spouse could claim the deduction.

Occasionally, a CPA jumped in with some editorial comments. One taxpayer said he had transferred several stocks from one brokerage to another. The new brokerage gave him a $600 "bonus" for transferring the stocks and also reimbursed him for the $80 fee that the old brokerage charged for the transfer. Are either of the amounts taxable? Yes, they are, said the CPA. No matter where the funds come from, income is income. And then he mused: "I wish my brokerage firm treated me as well."

The participating NYSSCPA members were Jack Angel, Ruth A. Sattig Betz, Donald Crotty , Pamela Diamond, Christopher G. Farrell, Gary Goldberg, Elliott Lavietes, Cari Manteiga , Jacquelyn Paccione , Alex Resnick , Scott Sanders, Robert Schaffer , Jill Scher, John Spinelli and Dov Zaidman.

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