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Tax considerations for instructors?

post #1 of 28
Thread Starter 
Hi,

Since I haven't done my taxes yet (procrastinating until I'm closer to the 4/15 deadline, I guess), I'm wondering what expenses are deductible when one is employed by a resort (not as a contractor)? I know the PSIA dues are deductible (half as charity, half as mandatory business expenses), but what about other things? Equipment which is required to teach? Books? Someone mentionned gas and mileage to me but I doubt it (I don't deduct gas going to my other job, and since I'm not a contractor I don't see why that would differ for the ski instruction job).

YA
post #2 of 28
Coach can chime in on this however I think you are cruisin for an audit.

Take a couple bags of clothing to Goodwill
post #3 of 28
If you are an employee, the problem is that "unreimbursed employee expenses" are only deductible to the extent they exceed 2% of your Adjusted Gross Income. I never wanted to open that can of worms for the relatively small deduction I would get once I subtracted that 2%.
If you file a Schedule C (Profit or Loss from a Business), you can deduct ski relates expenses there. If I were an equipment rep, or had some other kind of ski business, I would use Schedule C to deduct all my skiing expenses. There are special rules for "hobby businesses," and eventually you will need to show a profit, or they will limit your deduction to the gross revenue from the business. I could deduct my skiing expenses on the Schedule C for my consulting business, but I am afraid that it would not pass the laugh test in an audit.
Maybe you might better post your questions on www.epicaccounting.com, or even consult an actual CPA.

Regards, John
post #4 of 28
I was allowed to deduct the gas and car wear for the 30 miles when going from one job directly to my other job. I was not allowed to deduct for going from home to the first job and from the second job to home.

Also uniform cleaning bills, tools for the job, a pair of skis pro rated over ten years.

With the tax code revisions every year this may no longer hold true.

.....Ott
post #5 of 28
My first recommendation would be that unless you're talking major expenses, forget it and look for tax savings, or deductions elsewhere. The 2% limitation, coupled with the limited types of expenses you're allowed to deduct (as someone else's employee) is seldom worth the hassle. BTW, Ott's right in that "unreimbursed" travel expenses, outside of your normal commute are deductable (subject to the 2% limititation).

One thing I would caution and this holds true for just not ski instructors, but other non-self employeed people as well. The IRS takes a hard look and a hard line with deductions of these types and if they're material in amount be prepared to meet your friendly IRS auditor to support them.

Self employed is a whole different ballgame, but I'll spare you that discussion since that's not your situation.
post #6 of 28
Is the cost of maintaining profesional certifications deductable? In particular, PSIA requires bi-annual education credits attained through attending PSIA conducted or approved clinics. Besides the fees to attend, there may also be considerable travel and lodging expenses. Are any of these expenses deductable?

Also, ten years to pro-rate a ski? Seems to be about 8 years too long as to render this feature useless. A self employed friend told me that there have been new temporary allowances for the deductablity of new equipment at 100% immediately. Anyone know the details on that?
post #7 of 28
The other thing you have to consider is the IRS will want documentation (in an audit anyway) that proves you skied only for work. If you free ski 2 hours a day, say your early morning warmup and a few runs during lunch, and you are teaching 4 hours a day. then you can only claim 66% of your expenses that day. (you get the idea) so that 2% of AGI gets even harder to achieve. Since so many of us are subject to days where we go to the resort and get 2 hours of teach time but go ski the rest of the time, the time spent teaching compared to skiing starts to get down to the 40-50% or less. So you buy a pair of skis on the proform and maybe some gloves etc. total amount 1000.00, you can deduct 500.00 in equipment, take the AGI into account, and the tax benefits start to get very small. It also raises a flag for an audit. Is it worth it?

Now if skiing were your primary source of income, and you did not have another job to suppport your ski instructor status, you could probably build a case for all your skiing is "training and improvement" for your job. Now you have a reason to right off all your expenses.

BTW Travel to and from the resort are considered a "comute" and do not fall into "Unreimbursed" travel expenses. you could only write them off if your employer required you to go from one location to another within a group of resorts for instance.
post #8 of 28
Quote:
Originally posted by Springhill Crazie:
Is the cost of maintaining profesional certifications deductable? In particular, PSIA requires bi-annual education credits attained through attending PSIA conducted or approved clinics. Besides the fees to attend, there may also be considerable travel and lodging expenses. Are any of these expenses deductable?

Also, ten years to pro-rate a ski? Seems to be about 8 years too long as to render this feature useless. A self employed friend told me that there have been new temporary allowances for the deductablity of new equipment at 100% immediately. Anyone know the details on that?
Costs for maintaining Certs and training would be deductible under professional dues, Continuing ed, etc.

The self employed new equipment works for items less than a certain amount, no depreciation but again you have to prove that the equipment is used strictly for your employment and not for recreational/personal use. In the ski instructor world unless you are a full time instructor and not "skiing for fun" or have different skis for teaching/working on and free skiing then it's hard to document this.

DC
post #9 of 28
Quote:
Originally posted by Springhill Crazie:
Is the cost of maintaining profesional certifications deductable? In particular, PSIA requires bi-annual education credits attained through attending PSIA conducted or approved clinics. Besides the fees to attend, there may also be considerable travel and lodging expenses. Are any of these expenses deductable?

Also, ten years to pro-rate a ski? Seems to be about 8 years too long as to render this feature useless. A self employed friend told me that there have been new temporary allowances for the deductablity of new equipment at 100% immediately. Anyone know the details on that?
Rob

The deductability "test" is whether such "unreimbersed" expenses are required by your employer to maintain your employment. As a comparison, I'm required to take continuing education to maintain my CPA. The $$ associated with these classes are generally not deductible.

As to your 2nd question, certain tools can be deducted 100% in the 1st year, but only if it expected that their useful life is 1 year or less, or that they will be disposed of during or at the end of that year. As to depreciating skis, it would be over either 5 or 7 years, I don't remember which.

As a side note, somewhere along the line here someone is going to ask if I do taxes for a living and the answer is NO. I try to stay current enough to provide competent advice to my clients and therefore typically know or can easily determine how tax issues fall. As to why I don't do taxes, I tell people that I don't need $$ bad enough to deal with the hassle of providing tax services to the general public and the IRS.
post #10 of 28
[quote]Originally posted by dchan:
Quote:
Costs for maintaining Certs and training would be deductible under professional dues, Continuing ed, etc.
DC

We were posting at the same time, but I disagree with this unless you meet the requirement test as I stated in my post. I will admit that the IRS is sometimes soft in this area, due to differing requirements by "like" employers.
post #11 of 28
The 100% deduction falls in the section 179 realm if I remember correctly. This information is found on the instructions for form 4562. Also see publication # 946.

In a "cash" accounting system for a self employed person, I don't think the 5-7 year depreciation applies. It certainly does not apply to computer equipment (useful life often 5+ years) but can be deducted fully in the year it is put into service..

How it applies to skis, I'm not sure since I do so much free skiing I never even tried to look into it.

As far as maintaining certs, I believe Continuing Education as long as it is related to your work/business it would be deductable. I'll have to check it out because I spent a great deal of money for this purpose.

DC
post #12 of 28
Quote:
Originally posted by dchan:
The 100% deduction falls in the section 179 realm if I remember correctly. This information is found on the instructions for form 4562. Also see publication # 946.

In a "cash" accounting system for a self employed person, I don't think the 5-7 year depreciation applies. It certainly does not apply to computer equipment (useful life often 5+ years) but can be deducted fully in the year it is put into service..

How it applies to skis, I'm not sure since I do so much free skiing I never even tried to look into it.

As far as maintaining certs, I believe Continuing Education as long as it is related to your work/business it would be deductable. I'll have to check it out because I spent a great deal of money for this purpose.

DC
Education is generally not deductible for employees, and certifications and licenses are subject to the 2% threshold.

Whether you are on a cash or accrual accounting system affects only the timing of deductions and income, not the the deductibility of expenses. Most minor items of property can be deducted on the year they are purchased, regardless of your bookkeeping system, and regardless of how long they will be used. I deduct all my computer equipment in the year I purchase it, and I would deduct my skis the same way if I had a ski related business. Cars must be depreciated (or written off on a mileage basis), but light trucks up to $100,000 can be expensed in the year they are purchased. That's why I'm I'm going to replace my Civic with a Hummer or Escalade this year.

Regards, John
post #13 of 28
Thanks for the clarification John,
post #14 of 28
I would think that for any profession, the mandatory continuing ed is deductible fully.

Any thoughts on that as applied to a part time employee ski instructor taking the PSIA requirements? How about when the employer encourages but doesnot require certs?
post #15 of 28
Quote:
Originally posted by oboe:
I would think that for any profession, the mandatory continuing ed is deductible fully.

Any thoughts on that as applied to a part time employee ski instructor taking the PSIA requirements? How about when the employer encourages but doesnot require certs?
oboe

John has it right. Fees and licenses, yes; continuing ed, no. The disallowance of continuing ed for CPA's has been challenged and upheld on numerous occasions.
post #16 of 28
I havent't done it, but I own my own business and my accountant tells me that I can "assign" all my instructor income to my business and take deductions against it.

For example, for the past few winters I've taught part time in Vail and my accountant tells me that I can deduct the travel and lodging expenses (just like a normal business trip) as long as the income gets posted to my business.

Like I said, I haven't done it. It just seems like an invitation to an audit.

Bob
post #17 of 28
I'd like to hear your accountants rational for this. Unless, I'm not following you, I don't know how you have wages "assigned" to your personal business. But, I agree with you. If Vail gives you a w-2 for your wages and you include this income co-mingled with your business income, you will be audited.
post #18 of 28
Thread Starter 
Quote:
Originally posted by John Dowling:
Cars must be depreciated (or written off on a mileage basis), but light trucks up to $100,000 can be expensed in the year they are purchased. That's why I'm I'm going to replace my Civic with a Hummer or Escalade this year.
Uh, not that it's my business to tell you what to buy, but wouldn't you consider a truck that has similar environmental impact than the Civic (and hopefully better mileage than the two ones you mentionned)? Or you might be joking about the idiocy of the tax code here.

YA
post #19 of 28
wait for the new Escape. I think it's coming out in a Hybrid soon! That would be sweet! 4WD compact SUV Take the rear seat out and call it a Cargo Truck!
post #20 of 28
Quote:
Originally posted by dchan:
wait for the new Escape. I think it's coming out in a Hybrid soon! That would be sweet! 4WD compact SUV Take the rear seat out and call it a Cargo Truck!
No way! I'm getting the biggest Escalade I can find. Then I'm getting nitrous and a kick-@ss stereo with the money I save on my taxes. I'm getting an in-dash DVD player too, just so I don't get bored driving home from Vermont. I was going to get snow tires, but I couldn't find any that fit on my 20' wheels with the spinners that spin when you're standing still. I'm getting a hands free cell phone too, just because I care about safety.

John

[ March 30, 2004, 12:57 PM: Message edited by: John Dowling ]
post #21 of 28
If the continuing ed is MANDATORY, such as it is for lawyers in Vermont, then it's necessary in order to remain licensed. How is that not deductible?

In my case these days, my employer pays for the rather spepcialized continuing ed they need me to have, and I'm sure they take advantage of every dime.
post #22 of 28
So if an employer REQUIRED cert and the skier has to pay for the on snow and other courses required by PSIA, how would that not be dedcutible? I think that there's a big IRS difference between elective continuing ed and the mandatory continuing ed needed to stay employed. This is not a legal opinion, and I'll be sure to ask my tax accountant.
post #23 of 28
I suspect that if IRS took a look at your income from ski teaching vs your expenses they would conclude this is not a bona fide "profession" but a hobby. I'm not joking, I beleive I have heard of some such determination. Sorry to toss cold water on your fire! I hope I am wrong.
post #24 of 28
It's a bona fide profession to ME, damit! I'll pursue this and see what I can find.
post #25 of 28
Oboe. I understand but I'm not sure IRS shares your feeling though.
post #26 of 28
As I said, I'll pursue this and see what I can find. It's been awhile since I've been in a good fight, and I'm hungry for a taste of battle smoke.
post #27 of 28
Good luck. I'm rooting for you.
post #28 of 28
And don't forget to include all those tips as income.
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