TAXATION

Tuition deductions: Employment status matters

If you have a client who wants to deduct tuition, make sure you review employment status! In a December 2013 decision, the U.S. Tax Court ruled against a business student who tried to deduct the cost of tuition for his Masters of Business Administration (MBA) program, a case that could have major implications for other MBA students who may want to claim qualified tuition expenses.

In 2009, Adam Hart enrolled in an MBA program with a concentration in finance. While getting his MBA degree, he worked for a number of companies — none of which required him to attend MBA courses; he then obtained a position as a drug representative. He received a Form 1098-T tuition statement for 2009 reporting qualified tuition expenses of $18,600. He and his wife then filed a joint return and claimed the same amount as an itemized deduction for unreimbursed business expenses on Schedule-A, noting that it was for “MBA tuition,” and after a 2 percent of adjusted gross income, reduced their itemized deductions amount to $17,138. Hart claimed that he was in the business of selling pharmaceuticals and that the MBA classes enabled him to obtain employment in 2009.

The court noted that in Section 162 of the Tax Code and in Internal Revenue Service (IRS) regulations, a taxpayer must be established in a trade or business before any expenses can be deductible. The IRS argued that Hart was not established in a trade or business before he entered the MBA program. The judge agreed with the IRS and wrote “After reviewing the record in this case, and despite an effective pro se representation, we find that petitioner husband was not established in a trade or business before enrolling in the MBA program, and therefore his expenses are not deductible.” n

Source: NIQ Smart Brief

2013 TAX SEASON STATS ARE IN

The jury is out on how this year’s tax season will go, but statistics are now available for the 2013 season.

>> E-filing continues to grow: More than 122 million returns were e-filed. The IRS received more than 45 million returns from taxpayers who prepared and e-filed their own returns — up 4.6 from 2012.

>> Ninety-one percent of all returns filed by individuals are prepared using tax prep software, improving accuracy.

>> During 2013, the IRS issued more than 109 million refunds worth almost $300 billion.

>> Almost 77 percent of refund recipients chose to receive their refunds through direct deposit. n

>> RESOLVE TAX DISPUTES QUICKLY

The Internal Revenue Service (IRS) launched a new program in November 2013 to help resolve tax disputes for small businesses and the self-employed at the earliest possible stage. The Fast Track Settlement Program (FTS) from the IRS Small Business/Self-Employed Division and the IRS Office of Appeals is a customer-driven approach that helps taxpayers save time and avoid lengthy litigation. The program is designed to resolve audit issues during the examination process within 60 days from acceptance of the application. To apply, the taxpayer must submit Form 14017, Application for Fast Track Settlement.

Check out all the IRS programs for dispute resolution at www.irs.gov/Individuals/ Alternative-Dispute-Resolution. n

TAXATION

Help for the (tax season) weary

Pull yourself across the finish line of tax season with a little help. Visit www.vscpa.com/TaxResources for more info.

THE GREATEST PEER FORUM AROUND: Did you know your peers are only a click away? Become active in the taxation community of Connect, the VSCPA’s online member forum. This forum replaces the old VSCPA tax list server, and members consistently use this tool to ask questions of their fellow Virginia CPAs. If you don’t know the answer, we bet someone else does!

COFFEE DISCOUNTS: Is this the most important item? You be the judge. VSCPA members get 44 percent off Keurig machines, plus a discounted K-cup refill program. And you can even personalize your machine or mugs with your corporate logo (or VSCPA logo, if you desire).

TAX PRACTITIONER’S TOOLKIT: In this marketing kit, available from the American Institute of CPAs (AICPA), you’ll find tons of

E-9002-513 VA_Layout 1 2/27/13 1:02 PM Page 1 resources, like a one-pager to help clients understand all the taxes they will pay. Letters, copy for websites and newsletters, a fiscal cliff presentation, advertisements and more promotional materials are all included in the kit.

2014 AICPA TAX SEASON RESOURCES: In one place, you’ll find tax season news and developments, resources and tools by practice area, the AICPA's Tax Practice Guides and Tax Checklists and much more.

SAVINGS ON OFFICE SUPPLIES: VSCPA members get deep discounts from Office Depot on 150 office supply items, like paper and toner (up to 40 percent off the already discounted best market price).

EXPERT ADVICE: During tax season, you may need to consult tax publications from CCH (25 percent discount for members) or tax and legal research from NIQ (30 percent off). n

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