Here are more answers to your tax questions, courtesy of Chuck Stevens of Cooney Faulkner & Stevens LLC:

        Question: I am a salesman who retired in 1999 and started working part time. They furnished my car and paid other travel expenses until then, but now I have to pay for my own. They allow me $350 per month for a car. I put about 28,000 miles on that car last year. Can I get a tax break?

        Answer: Depending on the arrangement, you may be eligible for a tax break. Some considerations include whether you are an employee or independent contractor and whether you submit expense reports substantiating the expenses.

        If you are an employee and do not submit expense reports, your employer likely includes the $350 per month in your W-2. In this instance, you can claim the business use of your car as an unreimbursed business expense (subject to the 2 percent of adjusted gross income limitation). If you submit expense reports for at least $350 and it is not included in your W-2, you can still claim the excess as unreimbursed business expenses.

        If you are treated as an independent contractor and the reimbursements are included in your 1099, you can claim the auto expenses on Schedule C of Form 1040. If they are not included in the 1099, you will be able to claim the excess on your Schedule C.

        As for calculating the expenses, you can deduct either the business percentage of the actual expenses (depreciation, fuel, insurance, etc.) or the number of business miles times the standard mileage rate (32.5 cents in 2000). If you choose to use the simplified standard mileage rate for the first year your car is used for business, you must continue using the mileage method.
       

Casino winnings

        Q: What forms do I have to fill out for lottery winnings at the Argosy Casino? Do I have to file a form with the states of Indiana and Kentucky, and with the federal IRS?

        A: Gambling winnings are included in gross income and should be reported on your individual income tax returns. You are eligible to deduct gambling losses on Schedule A of your Form 1040, but only to the extent of your winnings.

        If the winnings were in Kentucky and Indiana and you are an Ohio resident, you should file nonresident returns in these states. You will be eligible to receive a credit on Schedule C of your Ohio return for taxes you owe to the other states.
       

Education credit

        Q: This year I received a 1098T from a university from which I had taken several courses. I didn't realize that I might be eligible for an education credit, as opposed to just deducting the cost of courses under business expenses. But the amount on the 1098T is for the amount I paid for courses both for this tax year and for the last tax year. Is this just an error on the part of the college and I should request that it send me a corrected 1098T? Or does an education credit involve an accumulation over several years? Would I need to file an amended return for 1999?

        A: There are two credits for qualifying higher education expenses, the Hope Credit and the Lifetime Learning Credit. Both are claimed on Form 8863. To qualify for the Hope credit, you must be in your first two years of post-secondary education, be enrolled in a program that leads to a degree, certificate, or other recognized educational credential, and carry at least a half-time load. The amount of the credit is dollar for dollar on the first $1,000 of tuition expenses and 50 percent of the next $1,000 paid for a maximum credit of $1,500 per student.

        The lifetime learning credit allows a credit for 20 percent of qualified tuition and related expenses for years in which the Hope Credit is not claimed. Both credits are phased out between $40,000 and $50,000 of adjusted gross income ($80,000 and $100,000 if married filing jointly). You cannot claim both a credit and a business deduction for the same tuition expenses.

        When calculating the credit, you should consider the amounts you paid in 2000 for qualified expenses regardless of when you took the classes. This should be the amount reflected on the 1098T. If it is not, you can claim only the credit for amounts paid in 2000. Amounts paid in 1999 would have to be claimed as a credit on an amended return, Form 1040X, assuming they qualify and your business expense must be reduced by the tuition amount.

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