Question

A doctor spent two weeks doing charity medical work in Mexico. In calculating her taxable income for the year, her accountant deducted as business expenses her round-trip airline ticket, meals, and a hotel bill for the two-week stay. She was surprised to learn that the accountant, following IRS rules, could not deduct as a cost of the trip the $8,000 of income she lost by being absent from her medical practice for two weeks. She asked the account, "Since lost income id not deductible as an expense, should I ignore it when I make my decision next year to go to Mexico for charity work?" Give the doctor some advice on decision making.

Please make sure that it is 200 words and detailed

Answer 1

From the understanding of the income tax laws, the income lost by being absent from the duty cannot be deducted from the taxable income. But on the other hand if the charity work itself was a part of the medical practice that the doctor was undergoing, in that case that income can be accounted. The income lost due to performing a charity work can not be associated with the taxes as per law.

At the same time, the expenses incurred due to travel can be accounted as deducted income as they are explicit. Implicit income on the contrary cannot be taken or considered for deduction.

Hence while making a decision to go to Mexico for charity work, the doctor will have to make sure that the trip is being considered as a part of the medical practice that the doctor is currently performing in order to get tax exemptions from the taxable income.