The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 51 cents per mile for business miles driven
• 19 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study.
Sunday, December 5, 2010
HOW MUCH DOES TURBO TAX COST YOU?
Did you know that millions of Americans who file their own tax returns pay the wrong amount? Just ask Treasury Secretary Tim Geithner, who missed $14,847 in self-employment tax using TurboTax to file his own return!
Tax-prep software helps you fill out the forms. But software is just a tool, not a solution. You still have to know how to use it. Sure, you can buy your own scalpel. But does that mean you should take out your own appendix?
Tax-prep software helps you fill out the forms. But software is just a tool, not a solution. You still have to know how to use it. Sure, you can buy your own scalpel. But does that mean you should take out your own appendix?
Tuesday, November 30, 2010
HOLIDAY PARTIES ARE COMING
As you may know the life of many people in my family was impacted by a drunk driver that killed my daughter in law and seriously injured my son. I received this video from a friend. It is very graphic and touching. I think that it should be played at every bar and party as a strong reminder of how driving impaired can really not only kill but also ruin lives.
Click below to view:
http://www.youtube.com/watch_popup?v=Z2mf8DtWWd8
Click below to view:
http://www.youtube.com/watch_popup?v=Z2mf8DtWWd8
Monday, November 29, 2010
DON'T LET THIS HAPPEN TO YOU
I hope everyone had a great Thanksgiving weekend. I had an experience that I wanted to share with you. For Thanksgiving my wife Maggie, my 13 year old son, Ryan and I went to Kansas City. We went to watch them turn on the lights at the Plaza.
I always enjoy looking at the different salons and spas. I like to notice their in-store advertising, the appearance, the products they sell, product placement and the overall look of the business. One spa really caught my attention which was located right on a corner- a prime location. When I walked by the first time, I noticed that they had posted that they were open until 10:00pm every evening. I was impressed with this as they are apparently double booking.
The next time I walked by, I came from another direction and looked through the corner window. What a mess! This was an office or maybe the call center. The desk was haphazard with a 32oz convenience store cup, a stack of mail and bills with papers and magazines lying on the window shelf. The computer screen was on and if you looked closely, you could see the schedule of appointments- needless to say, very unprofessional.
This experience made me come back and look at my accounting office. Sometimes you need to step back and look at yourself from a client’s prospective.
I always enjoy looking at the different salons and spas. I like to notice their in-store advertising, the appearance, the products they sell, product placement and the overall look of the business. One spa really caught my attention which was located right on a corner- a prime location. When I walked by the first time, I noticed that they had posted that they were open until 10:00pm every evening. I was impressed with this as they are apparently double booking.
The next time I walked by, I came from another direction and looked through the corner window. What a mess! This was an office or maybe the call center. The desk was haphazard with a 32oz convenience store cup, a stack of mail and bills with papers and magazines lying on the window shelf. The computer screen was on and if you looked closely, you could see the schedule of appointments- needless to say, very unprofessional.
This experience made me come back and look at my accounting office. Sometimes you need to step back and look at yourself from a client’s prospective.
Thursday, November 25, 2010
LAME DUCK SESSION HAS A LOT ON IT'S PLATE
Congress convened this past week as time is running out on the current Congress and as many tax issues were left hanging earlier in the year. This session takes place in the wake of the historic Congressional elections that recently took place, but the newly elected members will not be sworn in until January 3, 2011 as a part of the 112th Congress. That means the members of the 111th Congress remain in control and will be the ones called on to make some of these difficult decisions.
In the meantime, Congress will adjourn for the Thanksgiving holiday and is expected to begin consideration of many of these proposals upon its return on November 29th.
The difficult issues include:
Extension of the Expiring Bush Tax Cuts
If Congress fails to act by January 1, 2011; many Internal Revenue Code provisions expire, and return to what they were in 2001. A few of the affected items include:
1. Increasing all income tax rates, dividend tax rates, capital gains tax rates, eliminating marriage penalty relief in all brackets
2. Increased Federal withholding taxes- Should Congress fail to extend the Bush tax cuts the higher tax rates would normally require the IRS to issue new withholding tables for employers.
3. Reinstatement of itemized deduction limits
4. Reinstatement of personal exemption phase-out
5. Reduction in child tax credits
6. Reductions in IRA contribution limits
Reinstating the Estate Tax
If Congress does not act, the estate tax is automatically reinstated but at the rates and exemption levels that were in the law in 2001. The rates that existed in 2001 included a top estate tax rate of 55%, and a personal exemption level of $1 million, significantly lower than the $3.5 million exemption that was in effect in 2009 and the maximum rate of 45%.
Expiring Provisions and Extenders
Expect that votes in the House and Senate will take place but also expect the early votes to be more for politics than substance. Success on extending these issues and enacting a bill the President will sign is uncertain as of this date. Following is a partial list of expiring provisions and extenders that either expired at the end of last year or will expire at the end of this year. In some cases the credit or deduction is reduced.
1. Alternative Minimum Tax Indexing- currently not indexed for 2010
2. Education Tax Credits
3. Employment Tax Credits
4. Deduction for State and local Sales taxes in lieu of property taxes
5. Energy tax credits
6. Bonus depreciation rules
Extension of Unemployment Benefits
Congress must act to extend unemployment benefits for the long term unemployed, meaning those who have been unemployed for 99 weeks. Congress must act on this by December 1, 2010 as that is the date that benefits begin to run out under current law.
Enacting a Federal Budget
Congress has yet to enact any of the appropriations legislation necessary to allow for the continued funding of the federal government. The usual deadline for this is September 30 of the year, but Congress was unable to act and so deferred this deadline until December 3, 2010. Failure to either enact the appropriations bills or extend the continuing resolution would have a severe impact on every activity of the federal government.
Other Critical Issues for Congress
1099 Burdens
In the past year Congress enacted legislation that requires the IRS to impose a significant expansion of the rules to determine when a business owner must provide a 1099 to a business, incorporated or not, when providing goods and or services to a business. This included requiring providing 1099s to corporations for the first time, and for owners of rental property to provide a 1099 for each service provider or repair service. Recently legislation has been introduced to repeal this requirement, but it is unclear whether the revenue would have to be raised somewhere else.
Extending the Medicare Reimbursement Rates (Doc Fix)
The Health Care act enacted by Congress earlier in the year was unable to agree on a way to extend the Medicare reimbursement rates for seniors and it was extended through November 30. A permanent solution for this may not take place until next year.
In the meantime, Congress will adjourn for the Thanksgiving holiday and is expected to begin consideration of many of these proposals upon its return on November 29th.
The difficult issues include:
Extension of the Expiring Bush Tax Cuts
If Congress fails to act by January 1, 2011; many Internal Revenue Code provisions expire, and return to what they were in 2001. A few of the affected items include:
1. Increasing all income tax rates, dividend tax rates, capital gains tax rates, eliminating marriage penalty relief in all brackets
2. Increased Federal withholding taxes- Should Congress fail to extend the Bush tax cuts the higher tax rates would normally require the IRS to issue new withholding tables for employers.
3. Reinstatement of itemized deduction limits
4. Reinstatement of personal exemption phase-out
5. Reduction in child tax credits
6. Reductions in IRA contribution limits
Reinstating the Estate Tax
If Congress does not act, the estate tax is automatically reinstated but at the rates and exemption levels that were in the law in 2001. The rates that existed in 2001 included a top estate tax rate of 55%, and a personal exemption level of $1 million, significantly lower than the $3.5 million exemption that was in effect in 2009 and the maximum rate of 45%.
Expiring Provisions and Extenders
Expect that votes in the House and Senate will take place but also expect the early votes to be more for politics than substance. Success on extending these issues and enacting a bill the President will sign is uncertain as of this date. Following is a partial list of expiring provisions and extenders that either expired at the end of last year or will expire at the end of this year. In some cases the credit or deduction is reduced.
1. Alternative Minimum Tax Indexing- currently not indexed for 2010
2. Education Tax Credits
3. Employment Tax Credits
4. Deduction for State and local Sales taxes in lieu of property taxes
5. Energy tax credits
6. Bonus depreciation rules
Extension of Unemployment Benefits
Congress must act to extend unemployment benefits for the long term unemployed, meaning those who have been unemployed for 99 weeks. Congress must act on this by December 1, 2010 as that is the date that benefits begin to run out under current law.
Enacting a Federal Budget
Congress has yet to enact any of the appropriations legislation necessary to allow for the continued funding of the federal government. The usual deadline for this is September 30 of the year, but Congress was unable to act and so deferred this deadline until December 3, 2010. Failure to either enact the appropriations bills or extend the continuing resolution would have a severe impact on every activity of the federal government.
Other Critical Issues for Congress
1099 Burdens
In the past year Congress enacted legislation that requires the IRS to impose a significant expansion of the rules to determine when a business owner must provide a 1099 to a business, incorporated or not, when providing goods and or services to a business. This included requiring providing 1099s to corporations for the first time, and for owners of rental property to provide a 1099 for each service provider or repair service. Recently legislation has been introduced to repeal this requirement, but it is unclear whether the revenue would have to be raised somewhere else.
Extending the Medicare Reimbursement Rates (Doc Fix)
The Health Care act enacted by Congress earlier in the year was unable to agree on a way to extend the Medicare reimbursement rates for seniors and it was extended through November 30. A permanent solution for this may not take place until next year.
Wednesday, November 24, 2010
HIGHER WITHHOLDING COMING JANUARY 1?
The IRS has to publish the 2011 withholding rates so that employers know how much to withhold for payrolls starting in 2011. The problem is what will Congress do in the "lame duck" session? If Congress does nothing and tax rates go up, employers will have to start withholding higher rates.
Bloomberg.com reports, "Employers in the U.S. are starting to warn their workers to prepare for slimmer paychecks if Congress fails to vote on an extension of Bush-era tax cuts." The article notes that "lawmakers won’t start debating whether to extend the cuts, which expire Dec. 31, until after the Nov. 2 elections" -- and that regardless of what takes place, the IRS "will probably have to assume the cuts will expire and direct employers to increase payroll deductions starting Jan. 1." Bloomberg also reports that "allowing the tax cuts to expire, even temporarily, would deal a blow to disposable income and could curtail the consumer spending that accounts for about 70 percent of the economy," according to economists.
http://www.bloomberg.com/news/2010-10-27/tax-debate-delay-has-employees-in-u-s-preparing-for-smaller-take-home-pay.html
Bloomberg.com reports, "Employers in the U.S. are starting to warn their workers to prepare for slimmer paychecks if Congress fails to vote on an extension of Bush-era tax cuts." The article notes that "lawmakers won’t start debating whether to extend the cuts, which expire Dec. 31, until after the Nov. 2 elections" -- and that regardless of what takes place, the IRS "will probably have to assume the cuts will expire and direct employers to increase payroll deductions starting Jan. 1." Bloomberg also reports that "allowing the tax cuts to expire, even temporarily, would deal a blow to disposable income and could curtail the consumer spending that accounts for about 70 percent of the economy," according to economists.
http://www.bloomberg.com/news/2010-10-27/tax-debate-delay-has-employees-in-u-s-preparing-for-smaller-take-home-pay.html
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