Important Tax Information For Reps, Practitioners and Students;
Even Perpetual Students.
Sections in this Document
Oakworks., Inc. is required to collect and remit state sales tax on products shipped to Pennsylvania and Maryland for non-exempt customers. Oakworks® does not collect sales tax on products shipped to other states and customers may incur a use tax obligation to the state in which they reside.
Residents of the United States may be eligible for various Federal tax assistance programs including the ones listed below.
The information provided on this page is based on interviews with various accountants and professionals. Please seek advice from your own accountant or tax advisor before filing for any of these tax breaks to verify accuracy and applicability to your own situation.
Higher Education Tax Credits
The Taxpayer Relief Act of 1997 created two new higher education tax credits.
Hope Scholarship Tax Credit
You may be able to claim a nonrefundable Hope Scholarship tax credit for qualified tuition and related expenses for the first two years of post-secondary education in a degree or certificate program at an eligible educational institution on at least a half-time basis.
Fees for course-related books, supplies and equipment are included in qualified tuition and related expenses only if the fees must be paid to the institution as a condition of enrollment or attendance.
The Hope credit is available to you for these first two years (if you and your expenditures qualify), wherein you may be able to take a dollar-for-dollar credit on the first $1,000 and 50% of the next $1,000 of qualified expenses, for a potential total credit of $1,500 per year.
The Hope credit is available for the tax year in which the expenses are paid, as long as the education begins or continues during that year or begins within three months of the next year. Once you have completed the first two years of post-secondary education, the Hope credit is no longer available.
Lifetime Learning Credit
Subsequent to the first two years of post-secondary education, you may be eligible to take the Lifetime Learning Credit. The Lifetime Learning Credit is not allowed against expenses incurred for an eligible student for whom a Hope credit is allowed for any taxable year.
The Lifetime Learning Credit may allow you to claim a credit on up to 20% of $5,000 ($10,000 for tax years beginning in 2003) of qualified tuition or expenses paid during the tax year (The same qualified tuition and related expense limitations for the Hope credit also apply for the Lifetime Learning Credit).
Unlike the Hope credit, the Lifetime credit may be claimed for an unlimited number of years and may be used for graduate or other professional degree programs.
Re Both Hope and Lifetime Learning Credits
Both of the education credits phase out for single individuals with incomes between $40,000 and $50,000 (between $80,000 and $100,000 for married individuals filing joint returns). Considering the two available credits, over a four-year period, you may be able to claim credits of $5,000 ($1,500 for each of the first two years, and $1,000 for each of the two remaining years).
No credit is allowed for any expense for which a deduction is allowed under another code provision. Married taxpayers incurring qualified expenses must file a joint income tax return in order to claim either the Hope or Lifetime Learning Credit.
If you're a dependent student, you may not claim either credit on your own return. Parents who claim you as a dependent may claim the credit on their own return. However, typically, the parent's income is sufficiently high and they lose both the dependency exemptions for their children as well as eligibility for these credits. In that case, it may be financially prudent to emancipate the children, providing them the income to be self-sufficient, wherein they would claim their own dependency exemption, and also allow them to qualify for the above credits.
Both the Hope and Lifetime Learning credits are claimed by filing Form 8863 with your tax return. See IRS Publication 970, "Tax Benefits for Higher Education", and the instructions to Form 8863.
Please consult your tax advisor for additional information regarding these credits.
Potential Income Tax Deductions Scenarios
Below are two different income tax scenarios that a massage student / practitioner may encounter relating to the purchase of a massage table.
1) An individual buys a table as a student, but will not be practicing as a massage therapist within the same year. If the table was a part of the required tuition package that the student paid, then that tuition cost may qualify for the Hope or Lifetime Learning credit in the year tuition was paid.
Although the tax law provides for "no double benefit allowed", once the student becomes a practicing therapist (in a subsequent year) the table may be eligible to be converted to business use property. The adjusted cost (or fair market value, if lower) of such property may be taken as a deduction on your tax return, subject to various limitations (i.e., basis adjustments related to credits claimed in prior years). The forms used to report all of your business income and expenses would be:
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Schedule "C" of Form 1040 (Profit or Loss from a Proprietary Business)
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Form 4562 (Depreciation)
A massage table used by a practicing massage therapist is considered business property and therefore may be depreciable or expensed under Code Section 179.
Consult your tax advisor regarding the business expense deduction relating to the eligibility of this equipment.
2) A practicing massage therapist buys a massage table for his or her practice. The therapist would use
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And Form 4562 in determining the potential income tax deductions for the massage table.
The therapist would not be required to make any of the basis adjustments noted in scenario #1, however would use his or her purchase cost for this purpose.
Disabled Tax Credit
In 1990, the American With Disabilities Act became effective. One provision of the Act allows eligible small businesses to claim a tax credit on eligible access expenditures.
The credit shall be an amount equal to 50% of so much of the eligible access expenditures for the taxable year as exceed $250 but do not exceed $10,250.
The term "Eligible access expenditures" means amounts paid or incurred by an eligible small business for the purpose of enabling such eligible small business to comply with the applicable requirements under the Act.
The term "eligible access expenditures" includes, among other things, amounts paid or incurred to acquire or modify equipment or devices for individuals with disabilities. Certain massage tables can be eligible for this credit, since they meet the height requirements necessary for wheelchair transfer.
The Disabled Access Credit is claimed by completing Form 8826 with your tax return.
Further, it should be noted that the cost basis used for depreciation of "eligible access expenditures" must be reduced by the disabled access credit claimed. See the instructions to Form 8826 and consult your tax advisor for additional information regarding this credit.
Sales Tax Issue
As part of a student's admission requirement, an eligible educational institution may include the cost of a massage table (including applicable sales taxes) along with the charges for tuition and other related fees. The student, through vouchers furnished by the school, would order the massage table directly from the manufacturer.
The manufacturer would ship the table to the student and invoice the school, having received a valid, authorized voucher. Prior to being invoiced by the manufacturer, the school should have issued a "Blanket Resale Certificate" or "Exemption Certificate" to the manufacturer. The manufacturer would then invoice the school (without sales taxes), however, the school would collect sales taxes from the student (i.e., the consumer) and remit the applicable sales taxes to the appropriate taxing jurisdictions.
Since sales tax requirements vary from state to state, you should consult your tax advisor for additional information.
