Question

Alexandra is a veterinarian employed by Fast Vet Services. Susan is a self-employed veterinarian. During the current year, Alexandra and Susan have the same amounts of income and deductions. How does a deductible expense paid by Susan affect her taxable income differently than the payment of the same expense by Alexandra

Answer 1

Answer/Explanation:

Susan's veterinary expenses are deductible for adjusted gross income

because she is self-employed and at the same time her vet practice constitutes a business.

Therefore, all of her veterinary expenses are deductible for adjusted gross income.

Alexandra is said to be in a trade or business as an employee and

the unreimbursed expenses of an employee are deducted as miscellaneous itemized deductions.

Therefore, Alexandra only benefits if she itemizes her deductions while Susan will always get the full benefit of the deduction.