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Sch C - Session II

Sch C - Session II

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Published by bharat

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Categories:Types, Business/Law
Published by: bharat on Mar 18, 2011
Copyright:Attribution Non-commercial

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04/26/2011

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FORM 2106FORM 2106 ±± EMPLOYEE BUSINESS EXPENSES.EMPLOYEE BUSINESS EXPENSES.
FormForm 21062106 isis usedused toto reportreport employeeemployee businessbusiness expensesexpenses andand reimbursementreimbursement andand toto figurefigure thethe expensesexpenses toto deductdeduct onon ScheduleSchedule AA (Form(Form 10401040)) .. PartPart II figuresfigures thethe expensesexpenses andand reimbursementsreimbursements andand thethe amountamount of of allowableallowable deductiondeduction.. PartPart IIII isis usedused toto figurefigure thethe expenseexpense of of aa vehiclevehicle..
EmployeeEmployee VersusVersus Self Self--EmployedEmployed ::
hen
hen oneone personperson performsperforms servicesservices forfor anotheranother personperson ,, thenthen thethe performing performing personperson cancan bebe eithereither anan employeeemployee oror self self  employedemployed (an(an independentindependent contractor)contractor)..
ExpensesExpenses of of self self employedemployed areare classifiedclassified asas deductionsdeductions forfor AGIAGI && reportedreported onon ScheduleSchedule CC of of FormForm 10401040,, otherother wisewise itit shouldshould bebe reportedreported throughthrough FormForm 21062106..
Q
ualified
Q
ualified ExpenditureExpenditure::WhatWhat ExpensesExpenses areare deductible?deductible? ExpenseExpense mustmust bebe OrdinaryOrdinary && NecessaryNecessary
AnAn Ordinary Ordinary expenseexpense isis oneone thatthat isis commoncommon && acceptedaccepted inin youryour fieldfield of of trade,trade, business,business, andand professionprofession..
AA Necessary Necessary expenseexpense isis oneone thatthat isis helpfulhelpful && appropriateappropriate forfor youryour businessbusiness..
 
Q
uantum
Q
uantumof of DeductionDeduction::
Generally Generally EmployeeEmployee cancan claimclaim deductiondeduction forfor unun-- reimbursedreimbursed businessbusiness expensesexpenses whichwhich isis subjectsubject toto
22%% of of  AGIAGI ..Note:Note:
Tax payer can useTax payer can use
Form 2106Form 2106--EZEZ
if he satisfies theif he satisfies thefollowing two conditions:following two conditions:--
TheThe taxpayertaxpayer waswas notnot reimbursedreimbursed forfor thethe expensesexpenses or,or, if if thethe taxpayertaxpayer waswas reimbursedreimbursed ,, thethe reimbursementreimbursement waswas includedincluded inin thethe taxpayer·staxpayer·s incomeincome inin BoxBox 11 of of thethe FormForm
--22 ;; andand
If If thethe taxpayertaxpayer claimsclaims vehiclevehicle expensesexpenses using using thethe standardstandard mileagemileage raterate..
 
Vehicle Expenses on Line 1 of Form 2106Vehicle Expenses on Line 1 of Form 2106
Standard Mileage Rate:Standard Mileage Rate:
ou
ou may may bebe ableable toto useuse thethe standardstandard mileagemileage raterate toto figurefigure thethe deductibledeductible costscosts of of operating operating youryour carcar forfor businessbusiness purposespurposes.. ForFor 20072007,, thethe standardstandard MileageMileage raterate isis
4848..55 centscents aa milemile forfor thethe yearyear 20072007..
forfor allall businessbusiness milesmiles.. If If youyou useuse thethe standardstandard mileagemileage raterate forfor aa year,year, youyou cannotcannot deductdeduct youryour actualactual carcar expensesexpenses forfor thatthat yearyear.. ee..g g.. 1000010000 businessbusiness milesmiles ** 4848..55 centscents == $$44,,850850 deductibledeductible onon FormForm 21062106
ou cannot use the standard mileage rate if you:
ou cannot use the standard mileage rate if you:
U
se
U
se thethe carcar forfor hirehire (such(such asas aa taxi),taxi),
U
se
U
se twotwo oror moremore carscars atat thethe samesame timetime
ClaimedClaimed aa depreciationdepreciation deductiondeduction forfor thethe carcar usinusing any any  methodmethod otherother thanthan straightstraight lineline depreciation,depreciation,
ClaimedClaimed aa sectionsection 179179 deductiondeduction onon thethe car,car,
ClaimedClaimed actualactual carcar expensesexpenses afterafter 19971997 forfor aa carcar youyou leased,leased,

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