Tax Questions Answered by Your San Francisco Tax accountant

May 2017

Health Insurance Premium Deduction

Question: I am a sole owner of a S Corporation. Would I be able to write off my health insurance premiums if I get a individual health insurance?  


Answer: Since you are the only employee of the Corporation, you are able to get above the line deduction of your health insurance premium even the policy was purchased in your name. However, the premiums must be paid or reimbursed by the S corporation and you must report the premium paid as wages on W-2.


Formore on Employee tax-advantaged benefits, Read here.

Tuition to Treat Learning Disability

Question: My son has been diagnosed with dyslexia and we are planning to enroll him in a special program at his school to help him deal with his condition. Will the tuition cost for the program deductible?



Answer:  Children diagnosed with autism, Asperger's syndrome, dyslexia, unusual low IQ etc may attend a special school (or enroll in an extra service provided by school) for the principal purpose of obtaining medical care in the form of special education. As a result,  IRS has recognized that costs to attend special schools or curriculum for intellectually disabled children are considered the qualified medical expense.

Depreciation expenses on rental properties

Question: Why do I have to claim depreciation expenses on my rental properties?



Answer: Technically, you do not "have to". However, this would be a big mistake! There is something called
 "recapture tax": When you sell the property, IRS will charge ordinary income tax rate to the extent of depreciation allowed or allowable on the property. Therefore, even if you didn't take the deduction, IRS will charge you recapture tax as if you did. Gladly, there are a couple of ways to fix 
this. You can amend your returns or to change your accounting method and claim all depreciation in the year of the sale. 

Education expense

Question: I want to take some classes. Does it need to be related to my business to get a tax write off. (I am self employed and report my business on Sch. C)



Answer: If your education expenses are to maintain or improve skills or required by law for your current business, you can deduct them on Sch C. Related travel expenses can be deducted as well. Even the classes are not related to your business, you should look into the possibility of other education deductions and credits.

What's your question?

Circular 230:The articles are for general information only. In accordance with IRS Circular 230 they are not considered tax opinions for purposes of relying on such statements in any challenge of the reporting of the above transaction by the IRS. If a full tax opinion is required certain procedures must be met . Also there is a significant cost for a full tax opinion to meet the requirements of Circular 230.

CPA San Jose, CPA San Francisco  

T: 888-388-1422

T: 415-704-8989

F: 415-805-8934

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