Jilla, a new college graduate, accepts a full-time job (as an independent contra

Question

Jilla, a new college graduate, accepts a full-time job (as an independent contractor) that requires her to move from her apartment in Georgia to Maine. She incurs moving costs of $500 for lodging, $1,400 for transportation, and $400 for meals. Upon arriving in Maine, Jill commutes from her home to work at a cost of $1,200. Her first week on the job consisted other meeting with clients for 5 days down in Florida all of which was directly related to her new job. She incurred $800 in travel costs and $220 for meals associated with meeting her clients in Florida. During the year, Jill smartly contributes $5,000 to her Roth IRA. Additional Information: Assume that none of Jill's expenses are lavish or extravagant Jill's employer maintains a reimbursement policy that makes it an accountable plan. Jill's filing status is single and she can't be claimed as a dependent by anyone else. Jill's Salary for the year was $45,000. Jill worked for 45 weeks during the year and worked 32 weeks the following year. Jill's employer completely reimbursed her moving transportation cost of $1,400. REQUIRED: Assume you are Jill's accountant. She has no idea what to do for her taxes, the information above is what she told you in the office visit Based on the information provided, indicate the appropriate tax treatment of Jill's expenses and income for the year. Use a list that identifies the income/expense item, the appropriate tax treatment and the appropriate authoritative source/citation. Be as brief as possible in providing your answer. For example: Briefly discuss how or if your answer would change if her employer had a nonaccountable plan?

Explanation / Answer

1)

The tax treatment is as follows:

Item

Tax treatment

Citation

Lodging costs

Deduction allowed

If not reimbursed

Transportation costs

Deduction not allowed

It is reimbursed

Meals cost

Deduction allowed

If not reimbursed

Contribution to IRA

Deduction allowed

If not reimbursed

2)

If her employer had a non- accountable plan; the transportation costs are allowed for deduction in computing tax.

Item

Tax treatment

Citation

Lodging costs

Deduction allowed

If not reimbursed

Transportation costs

Deduction not allowed

It is reimbursed

Meals cost

Deduction allowed

If not reimbursed

Contribution to IRA

Deduction allowed

If not reimbursed

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