A Locally Based Firm Committed to Delivering Value

1
TAX TIPS FOR JOURNALISTS presentation for ASIAN
AMERICAN JOURNALISTS ASSOCIATION-NY March 22, 2003

PREPARED BY PETER CHEN PAMELA YU Disclaimer The
following slides are for informational purposes
only and should not be construed as financial
advice. Neither AAJA nor Urbach, Kahn Partners
can be held liable for the accuracy of the
information. Please consult the IRS or your tax
advisor for specific questions about legal issues
or tax advice.
A Locally Based Firm Committed to Delivering Value
2
OVERVIEW

• I. Tax Deductions for Journalists/
  Reporters/News Media People (collectively
  Journalists)
• II. Journalists and Stock Options

3
OVERVIEW (CONTD)

• III. Retirement Plans
• IV. Foreign Journalists

4
I. TAX DEDUCTIONS FOR JOURNALISTS
5
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Education
• If maintains or improves skills required in
  employment or trade or business
• If meets the requirement of employer or as a
  condition to retention
• Not deductible if to meet minimum educational
  requirements to qualify for employment or other
  business.

6
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Attending Meetings and Conventions
• Business Related Organizations
• Benefits your trade or business
• e.g. AAJA meeting
• Attendance at convention can be voluntary, i.e.
  can still deduct costs of trip if not required by
  employer.

7
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Conventions held on cruise ships are deductible
  up to 2,000 if ports of call are all in the U.S.
  and cruise conventions are directly related to
  work.
• Foreign countries conventions - deductible only
  if you can show it is reasonable for
  conventions to be held at foreign countries.

8
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• What can you deduct?
• Travel
• Hotel/lodging
• 50 Meals
• Attendance fee

9
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Travel
• While Away from Home on Business
• Expenses incurred while away from home in pursuit
  of trade or business
• Home regular or principal place of business,
  without regard to residence

10
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Meals (50)
• Lodging/Hotel Rooms
• Transportation (airplane, rail tic
• kets)
• Cars - cost to rent
• Reasonable amount for baggage

11
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Spouse and dependents expenses are not
  deductible unless they are an employee of the
  person paying for the expenses (e.g.
  photographers spouse who does work for the
  photographer)

12
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Combined Business and Personal Travel
• Travel Within US
• Purpose of trips has to be primarily business
• Travel to and from destination is deductible if
  primarily business
• Primary purpose is based on facts and
  circumstances. Amount of time spent on each
  activity is an important factor.

13
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Foreign Travel
• Allocate expenses on a day-to-day basis
• Exceptions

14
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Transportation
• Costs of transporting from place of work to
  another location in pursuit of a trade or
  business while not away from home.
• e.g. Train, bus, taxi, parking, tolls, car
  (actual expenses or standard mileage rate of
  0.365 per mile) etc.
• Commuting expenses (between residence and place
  of business) not deductible.

15
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Home Office Expense
• The dwelling unit is used as your principal place
  of business
• Conduct trade or business on a regular and
  exclusive basis.
• Allocate expenses between business and personal
  uses
• e.g. Utilities, insurance, rent, repairs etc.

16
I. TAX DEDUCTIONS FOR JOURNALISTS (CONTD)

• Meals Entertainment
• Directly related to or associated with trade or
  business
• In the context of active business discussions
• For building goodwill before or after business
  meetings or discussions

17
II. JOURNALISTS AND STOCK OPTIONS

• Things to watch out and plan for if you have
  stock options
• Need to know what type of options you have

18
II. JOURNALISTS AND STOCK OPTIONS (CONTD)

• Triggering events
• When you receive stock options
• When you exercise the options (i.e. buy the
  stocks)
• When you sell the stock you got from the exercise

19
II. JOURNALISTS AND STOCK OPTIONS (CONTD)

• Tax Effects
• Is it taxable?
• When is it taxable?
• What is your cost basis in the option or stock?
• Which part of it is taxed as ordinary income and
  long-term capital gain (at a lower tax rate)?
• Seek tax advice from professionals

20
III. RETIREMENT PLANS
21
IV. FOREIGN JOURNALISTS(JOURNALISTS WHO ARE NOT
U.S. CITIZENS, e.g. H/B VISA)

• Need to determine U.S. tax status
• Can be taxed either as a Non-resident or Resident
• Year of entry or departure may have planning
  opportunities
• De Minimus rules may apply
• Need to look at Tax Treaties
• Self-employment tax not apply if work as
  independent contractor