Useful Financial Information For Firefighters
Tax Return Preparation Discount Card
Bring this into our office and receive 50% off the preparation of your 2010 individual income tax return at Sean M. Hugo, CPA, PC.
Business Entity Selection
Many Firefighters start side businesses to make extra money during their off hours. If you have started your own side business or are considering starting one you should give some thought to how the business will be structured. For a listing of the various types of business formations and the pros and cons of each take a look at this document.
For most business owners there are two main reasons why the structure of a business is important:
- Choosing the proper entity structure can significantly reduce your taxes.
- The proper entity structure can reduce liability associated with owning your own business.
The two business structures that provide you with tax savings for employment taxes are S-Corporations and LLC's that make the election to be treated like an S-Corproation for tax purposes. An LLC makes the S-Corporation election by filing form 2553. There are specific timing requirements for the filing of form 2553 so be sure to contact our office if you have questions.
This is not meant to be legal advice but is being provided as general business information. In some cases by either setting up an LLC or an S-Corpoation you can protect your personal assets if your business is ever sued. In order for a busienss to be considered seperate from its owner it is important to not blur the line between the business and the owner. One way to do this is to keep seperate bank accounts for personal expenses and a completely seperate account for you business expenses. Don't pay personal expenses out of your business account. If the business is sued the Plantiff's Attorney will try to "pierce the corporate veil" meaning there is no difference between the business and the owner. It the Plantiff Attorney is successful in piercing the corporate veil then the assets of the business owner will be at risk.
Tax Savings Information For Firefighters
Over the years we have been able to provide considerable tax savings for fire fighters. To see many of the tax deductions that are common for fire fighters click here for our tax brouchure for fire fighters.
Probably the most deduction that will save the most money is the deduction for food. Payments to an organized mess fund that are required of a fireman by his immediate superiors at the fire station, regardless of whether he leaves his assigned duty station during the normal 24-hour shift and actually participates in the mess, are expenses that are directly and proximately related to the active conduct of the fireman's trade or business and are deductible under IRC Section 162(a). The most important point here is that the payments must be required as a condition of employment. In T.C. Summary Opinion 2004-63 the court upheld that if the firefighters' payments into a common meal fund are voluntary (not a condition of employment), the expresses constitute personal expenses and as such are not deductible.
Expenses such as continuing education and repairs are included in these possible deductions. Additionally, any travel related to a job may be deducted. Because of their job, firefighters are given a variety of tax deductions.
If a firefighter chooses or is mandated to join a union, fees can be deducted. Annual and monthly union dues and expenses incurred as a result of the union are also deducted. In addition to requiring union involvement, many firefighters are instructed to further their education. Costs involved in participating in further education are deductible. This includes all fees, textbooks and travel to and from classes. Unfortunately, initial education costs and those classes which are taken to acquire a new skill are non deductible. Required insurance and legal protection is also a deductible expense for firefighters
Firefighters are also allowed to deduct some additional expenses they incur. If using a phone line solely for business work, this cost and cell phone costs are fully deductible. Firefighters can deduct the cost and care of all pieces of their uniforms. This includes jackets, pants, boots, gloves and their respective cleaning costs. Additionally, the cost of repairing and maintaining vital equipment such as pagers, flash lights and batteries are deductible. All of the costs that you incur as a result of maintaining your equipment are deductible. Included in these costs would be travel to and from a station or to and from a cleaning venue and toll and parking fees.