The Internal Revenue Service 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. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Monday, December 06, 2010
1099 Reporting Reminder for 2011
There have been a few failed attempts at legislation to change the new 1099 reporting requirements. The new reporting requirements were passed as part of the two healthcare bills in 2010.
The summary reminder that follows was developed by Janet Graves, CPA and Matt Curbeau, CPA. Janet is a manger and Matt is an experienced staff in our tax practice .
Future 1099 Requirements – will you be prepared?
Effective January 1, 2012 businesses will be required to issue Forms 1099 for virtually all payments made to vendors of $600 or more, unless the payee is a tax-exempt recipient. Items which will be subject to the new reporting requirements include merchandise, equipment, inventory and raw materials.
Under the new law, businesses will be required to collect and enter into their accounting systems taxpayer identification numbers from corporate payees, providers of merchandise, equipment, etc. If a correct TIN is not provided, the businesses will also be required to make backup withholding from payments.
The reporting requirements by businesses can be eliminated if payments are made via a credit or debit card. The IRS has stated that the reporting requirements will fall on the credit card companies.
Beginning with payment made in 2011, most landlords will be required to comply with current 1099 reporting requirements. In the past, landlords were not considered to be in a trade or business (which is a requirement to need to issue 1099's) for purposes of 1099 reporting. Beginning on January 1, 2011 for 1099 reporting purposes, landlords will be considered to be in a trade or business and will therefore need to prepare and file form 1099 for applicable payments.
What is the next step?
Businesses that have purchases in excess of the $600 limit should start evaluating their current accounting system to ensure that it can track and report non-credit card payments by vendor and reviewing vendor information to be sure that correct TIN’s are on hand for reporting.
Team DKB will keep you updated as further guidance on the new law becomes available.
The summary reminder that follows was developed by Janet Graves, CPA and Matt Curbeau, CPA. Janet is a manger and Matt is an experienced staff in our tax practice .
Future 1099 Requirements – will you be prepared?
Effective January 1, 2012 businesses will be required to issue Forms 1099 for virtually all payments made to vendors of $600 or more, unless the payee is a tax-exempt recipient. Items which will be subject to the new reporting requirements include merchandise, equipment, inventory and raw materials.
Under the new law, businesses will be required to collect and enter into their accounting systems taxpayer identification numbers from corporate payees, providers of merchandise, equipment, etc. If a correct TIN is not provided, the businesses will also be required to make backup withholding from payments.
The reporting requirements by businesses can be eliminated if payments are made via a credit or debit card. The IRS has stated that the reporting requirements will fall on the credit card companies.
Beginning with payment made in 2011, most landlords will be required to comply with current 1099 reporting requirements. In the past, landlords were not considered to be in a trade or business (which is a requirement to need to issue 1099's) for purposes of 1099 reporting. Beginning on January 1, 2011 for 1099 reporting purposes, landlords will be considered to be in a trade or business and will therefore need to prepare and file form 1099 for applicable payments.
What is the next step?
Businesses that have purchases in excess of the $600 limit should start evaluating their current accounting system to ensure that it can track and report non-credit card payments by vendor and reviewing vendor information to be sure that correct TIN’s are on hand for reporting.
Team DKB will keep you updated as further guidance on the new law becomes available.
Friday, December 03, 2010
Last Minute Tax Advice...Last Minute Legislation!
I typed in "last minute tax planning tips" into a Google search. The page hits filled the first search results page with that exact phrase and kept on going.
We are spending significant time in November and December 2010 working with clients to determine year end tax planning strategies. As with many things in life, taxes are about timing...timing of recognition of income and deduction of expenses. The timing of these items can have a significant impact on a business's or individual's tax liabilities. For example, moving the sale of a security from one year to the next can have an impact on the resulting tax due. We plan event like this to minimize our client's tax liabilities.
All the web posts and new articles about last minute tax planning tips makes me feel like we are behind in serving our clients. However, we am still not certain in many cases what to tell clients to do. We make informed and educated guesses on what the the tax law might look like in 2011 and after. In many cases we do not know what the law will be for 2010. All of this happening and unresolved on December 3, 2010.
Karl Rove's article in the Wall Street Journal( Karl Rove: Nancy Pelosi's Unwelcome Christmas Gift) may really be directed as a criticism of Speaker Pelosi. It provides a lengthy summary of the many unresolved tax issues for 2010, 2011 and after. I found that part more interesting.
CPA's like rules. We work hard to understand them, properly implement them and help our clients to pay the lowest tax liability allowed under the law. What are the rules? I don't exactly know. Do you?
I am starting to get the feeling like we are not the ones who are behind.
We are spending significant time in November and December 2010 working with clients to determine year end tax planning strategies. As with many things in life, taxes are about timing...timing of recognition of income and deduction of expenses. The timing of these items can have a significant impact on a business's or individual's tax liabilities. For example, moving the sale of a security from one year to the next can have an impact on the resulting tax due. We plan event like this to minimize our client's tax liabilities.
All the web posts and new articles about last minute tax planning tips makes me feel like we are behind in serving our clients. However, we am still not certain in many cases what to tell clients to do. We make informed and educated guesses on what the the tax law might look like in 2011 and after. In many cases we do not know what the law will be for 2010. All of this happening and unresolved on December 3, 2010.
Karl Rove's article in the Wall Street Journal( Karl Rove: Nancy Pelosi's Unwelcome Christmas Gift) may really be directed as a criticism of Speaker Pelosi. It provides a lengthy summary of the many unresolved tax issues for 2010, 2011 and after. I found that part more interesting.
CPA's like rules. We work hard to understand them, properly implement them and help our clients to pay the lowest tax liability allowed under the law. What are the rules? I don't exactly know. Do you?
I am starting to get the feeling like we are not the ones who are behind.
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