In Indiana, roommates who share rent,

 share the deduction 

My roommate and I share the rent on our apartment. During 1999 each of us paid more than $2,000 in rent. My roommate wants to claim the renter’s deduction on his Indiana tax return. Does this mean I can’t claim the deduction? K.M., Indianapolis

According to Cheryl Denk, communications director for the Indiana Department of Revenue, roommates who share in the rental of an Indiana property are both entitled to claim the $2,000 renter’s deduction, as long as the roommates are single. A married couple sharing the rent expenses on an apartment is only entitled to one deduction, even if the husband and wife file separate tax returns. Claim the deduction on Schedule 1 of your Indiana income tax return.

I have been getting some pretty hefty charges from the BMV regarding registration charges. Are they deductible on Federal or Indiana state tax forms? D.C., Indianapolis

A portion of the charge is deductible as an itemized deduction on federal Schedule A, as property tax. The deductible portion is described on the registration form as "county tax." There is not a similar deduction on the Indiana return.

On my 1040, if I have a business loss from my Schedule C, do I subtract that when adding up my adjusted gross income, or just count it as a zero amount?

R.P., Indianapolis

There are a couple of issues to consider when you are trying to determine whether or not you can deduct a loss from your business. First, has the business shown a loss for three of the past five years? The IRS considers a business that is not profitable in three out of five consecutive years to be a hobby, and the loss from a hobby is not deductible.

If your business is considered to be a hobby, you will still report the income from the business as “Other Income” on page one of your 1040, and you can deduct related expenses, only the to extent of the income, as a miscellaneous deduction on your Schedule A

The other issue to bear in mind is, have you taken a deduction for a home office? You cannot use the expenses from your home office to create or increase a loss from your business. If the home office expenses would be deductible anyway, such as your mortgage interest, real estate tax, and expenses directly attributable to your business, you are allowed to deduct these expenses, even if they create a loss in your business. Other home office expenses cannot be deducted currently, but can be carried over to next year’s Schedule C.

Can I mail my quarterly estimated tax payment for the first quarter of 2000 in the same package with my income tax return? K.L., Indianapolis

Your federal quarterly tax payment needs to be mailed separately from your federal income tax return. The two do not go to the same location. Federal tax returns from Indiana get mailed to the IRS at Cincinnati, Ohio, 45999-0002 (no street address). Estimated tax payments from Indiana go to the IRS at P.O. Box 7422, Chicago, IL 60680-7422.

If you are making a quarterly payment for Indiana, you can include that first quarter payment right on your Indiana income tax return, so you don’t need a separate mailing for the first quarter of your state tax.

My question is, is it possible to take the Hope Scholarship credit once one has already taken the Lifetime Learning Credit? For example if a person has a bachelor’s degree, then returns to college to pursue an associate’s degree, would this person qualify for the Hope Scholarship credit. T.U., Indianapolis

The rules for the Hope scholarship credit state that the credit is available only for the first two years of postsecondary education. Since the person you describe has had several years of postsecondary education, even though he may be considered a freshman again, he would not qualify for the Hope credit.

The student may qualify for the Lifetime learning credit. This credit is available for an unlimited number of years, so even if this person has taken the Lifetime learning credit in the past, he may continue to qualify for the credit.

The Lifetime learning credit is allowed for 20% of tuition and school fees, up to a maximum credit of $1,000 per year. Calculate the credit on tax form 8863, Education Credits.