Unanswered Tax Questions

If you have received a decision from the Taxpayer Advocate Service (TAS) that you disagree with, it is important to understand that TAS is an independent organization *within* the IRS designed to assist with systemic issues or hardships; they do not have the legal authority to "overrule" Internal Revenue Code or formal IRS examiner findings. You cannot technically "appeal" a TAS decision in the way you appeal a court ruling. However, you have two primary options: 1. **Request a Review:** You can ask to speak with the **Local Taxpayer Advocate (LTA)** or their supervisor to review the case closer. If the issue is a disagreement on the law, they may issue a Taxpayer Assistance Order (TAO), though these are rare. 2. **Formal IRS Appeals:** If your underlying tax issue (e.g., an audit or lien) is still unresolved, you should bypass TAS and file a formal protest with the **IRS Independent Office of Appeals**. This is a separate legal process using Form 12203 or a formal protest letter. If the IRS Appeals office also denies your claim, your final recourse is usually filing a petition with the **U.S. Tax Court**.

Since the air purifiers are used in a space specifically dedicated to your business and used for seeing clients, they are considered a **business expense**. Specifically, because these are tangible items with a useful life, you would typically deduct them as office equipment or supplies. Under the **De Minimis Safe Harbor** election, you can usually deduct the full cost in the year of purchase rather than depreciating them, provided they cost less than $2,500 each. However, a home office occupying **67%** of a home is an exceptionally high percentage that frequently triggers IRS scrutiny. You must ensure that this 67% is used **exclusively and regularly** for business. If the air purifiers are ever moved to or used in the residential portion of the home, the deduction must be prorated or disallowed. Since you operate as an **S Corp**, you should not take this deduction on Schedule C. Instead, the corporation should purchase the units directly, or you should seek reimbursement through an **Accountable Plan**, which allows the corporation to deduct the expense and reimburse you tax-free.

If your home office occupies 57% of your home and meets the requirements for a home office deduction, then 57% of your household utility bills can typically be included as a business expense. This percentage generally applies to other indirect home expenses as well, such as mortgage interest, property taxes, home insurance, and depreciation. To qualify, the space must be used exclusively and regularly for your business, and it must be your principal place of business, a place to meet clients, or a separate structure. For an S corporation, these expenses are typically reimbursed to the shareholder-employee through an accountable plan.

For a single-member LLC owned by a non-resident alien, the LLC is generally treated as a foreign person for U.S. federal income tax purposes, including FIRPTA.

Working as an independent contractor, such as a Spark Driver, means your income is considered self-employment income. This type of income **can** qualify for the Earned Income Credit (EIC), similar to W-2 wages. The main difference for EIC purposes is that your "earned income" from self-employment is generally your *net profit* after deducting all ordinary and necessary business expenses. This means expenses like mileage, vehicle maintenance, and phone costs will reduce your gross income to arrive at the net profit reported on Schedule C. Your eligibility for

Yes, the $120 vision test for your driver's license renewal likely qualifies as a business expense for your S-Corp. For an expense to be deductible, it must be both ordinary and necessary for your business. Since you provide home health care in patients' homes, driving is an essential part of your business operations. A valid driver's license, and by extension, the required vision test to maintain that license, is necessary to perform this core business function. Therefore, the cost directly relates to your S-Corp's ability to conduct its primary business activities.

For the sale of inherited land reported on Form 1099-S, you will need to report this transaction on your tax return. First, establish your cost basis for the inherited land. For inherited property, the basis is typically the fair market value (FMV) of the property on the date of the decedent's death. This "stepped-up basis" is essential for calculating your gain or loss. You will report the sale on Form 8949, Sales and Other Dispositions of Capital Assets. On this form, you'll enter the proceeds from the sale (found on your 1099-S) and your calculated basis. The resulting gain or loss is then carried over and summarized on Schedule D (Form 1040), Capital Gains and Losses. Because the property was inherited, any gain or loss is generally treated as long-term, regardless of how long you actually held it. Remember to retain all documentation related to the inheritance and the sale for your records.

Based on the information provided, if your employment terminates in the year you attain age 55 or later, distributions from this Plan due to that separation from service are generally exempt from the 10% additional tax on early withdrawals. This exception applies to distributions from qualified plans made to an employee after separation from service if the separation occurs in or after the calendar year the employee attains age 55. Your plan's language regarding "termination of employment" aligns with this requirement. Therefore, you would typically not be subject to the extra 10% penalty on withdrawals taken after such a termination, provided the distribution is from a qualified plan. Regular income tax will still apply to the taxable portion of the distribution.

The $1000 business computer is indeed an asset subject to depreciation. For tax purposes, you have a couple of primary ways to deduct its cost. One method is Section 179 expensing, which allows you to deduct the full cost in the year the asset is placed in service. However, this deduction is limited to your taxable business income. If your business has zero taxable income, you generally cannot use Section 1

Contributions to a 529 plan are not deductible on your federal income tax return. For New York State income tax purposes, you can deduct contributions made to *any* state's 529 plan. As someone who works in New York and likely has New York source income, you would typically be eligible to claim this deduction on your New York non-resident income tax return. The maximum deduction is $10,000 for single filers or $20,000 for those married filing jointly. As a Connecticut resident, you can also deduct contributions made to *any* state's 529 plan on your Connecticut resident income tax return. Similar to New York, the maximum deduction is $10,000 for single filers or $20,000 for those married filing jointly. Therefore, you can deduct your contributions on both your New York and Connecticut state income tax returns, subject to their respective limits.