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    "Real" Net Income

    Client makes good money for these parts ($170K). Job attaches to having to be on natural disaster sites. Last year went to 4 sites, ranging from Santa Ana winds to Hurricane Irene.

    Problem is, more often than not he has to pay room and board and is not reimbursed. Tax home is Mobile, AL. Company does not have an "accountable plan" for these type of expenses, according to client. Two of the locations were incredibly expensive - greater LA and greater DC.

    Had $25K in travel, per diem, hotels, etc. to go along with $170K in income. However, this goes on Form 2106, which means he loses $3400 in expenses to the 2% haircut. His whopping salary is somewhat misleading, as his "real" net income is less than $145K.

    Here comes the "rest of the story." Most of these states measure the income by starting with Federal AGI, and do not allow itemized deductions no matter how great. (AL is an exception) My question: is there some way to take advantage of these $25K in real expenses such that he can get relief at the state level??
    Last edited by Snaggletooth; 02-25-2012, 01:00 AM.

    #2
    Originally posted by Snaggletooth View Post
    Client makes good money for these parts ($170K). Job attaches to having to be on natural disaster sites. Last year went to 4 sites, ranging from Santa Ana winds to Hurricane Irene.

    Problem is, more often than not he has to pay room and board and is not reimbursed. Tax home is Mobile, AL. Company does not have an "accountable plan" for these type of expenses, according to client. Two of the locations were incredibly expensive - greater LA and greater DC.

    Had $25K in travel, per diem, hotels, etc. to go along with $170K in income. However, this goes on Form 2106, which means he loses $3400 in expenses to the 2% haircut. His whopping salary is somewhat misleading, as his "real" net income is less than $145K.

    Here comes the "rest of the story." Most of these states measure the income by starting with Federal AGI, and do not allow itemized deductions no matter how great. (AL is an exception) My question: is there some way to take advantage of these $25K in real expenses such that he can get relief at the state level??
    Interesting. Now if he were my client, ....... (grin)

    We can always tell him what we have always known, that nobody said all taxes are fair.

    I remember the frustration when a Georgia client moved to NM permanantly. Due to retirement income exclusions, the couple had not had any state tax on their retirement money, not even on Social security payments according to state law But NM of courses starts with federal AGI. Boy, what a shock!

    Glad to see he's doing better than teaching school in Alabama.
    ChEAr$,
    Harlan Lunsford, EA n LA

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      #3
      You Know Who

      ...and wish he were STILL your client!!

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