Mileage Rates for 2018

The IRS recently announced mileage rates to be used for travel in 2018.

  • The standard business mileage rate increased by 1 cent to 54.5 cents per mile.
  • The medical and moving mileage rates also increased by 1 cent to 18 cents per mile.
  • Charitable mileage rates remained unchanged at 14 cents per mile.
2018 Standard Mileage Rates
Mileage Rate/Mile
Business Travel 54.5¢
Medical/Moving 18.0¢
Charitable Work 14.0¢
Mileage Rates

Here are 2017 rates for your reference as well.

2017 Standard Mileage Rates
Mileage Rate/Mile
Business Travel 53.5¢
Medical/Moving 17.0¢
Charitable Work 14.0¢
Mileage Rates

Remember to properly document your mileage to receive full credit for your miles driven. We recommend using MileIQ for recording your miles. (Note that there might be additional fees involved)

Call Darshi Kasotia, CPA today at 832 532 3000 or Contact Us online now.

 

1099 Filing Date Just Around The Corner

If you operate a business and engage the services of an individual (independent contractor) other than one who meets the definition of an employee, and you pay him or her $600 or more for the calendar year, you are required to issue the individual a Form 1099-MISC soon after the end of the year to avoid penalties and the prospect of losing the deduction for his or her labor and expenses in an audit.

The due date for mailing the recipient his or her copy of the 1099-MISC that reports 2017 payments is January 31, 2018. That is also the due date for filing the 1099-MISC with the IRS.

Call Darshi Kasotia, CPA today at 832 532 3000 or Contact Us online now.

401(k) limits to change for 2018

401k Contribution
A 401(k) is a good way to save for retirement because your money grows tax-free.

The government will raise the contribution limit to $18,500 from $18,000 in 2018.

Those age 50 and older can save even more by making what’s called a “catch-up” contribution. The catch-up contribution is limited to $6,000 a year, for a total of $24,500.

These limits don’t include the matching contribution you may receive from your employer.

They also apply to 403(b) plans and the federal government’s Thrift Savings Plan.

The New Year is a great opportunity to meet with your tax professional and begin planning to meet your tax goals.

Call Darshi Kasotia, CPA today at 832 532 3000 or Contact Us online now.

Year End Tax Moves

It’s That Time Again: Year end Tax Moves

While 2013 will be full of surprises as new tax laws are felt for the first time, there are still opportunities to reduce your tax obligation now and into next year. Here are some ideas worth looking at.

1. Make effective use of capital gains and losses.Remember short-term capital gains (assets held less than one year) have a maximum tax rate of 39.6% while the maximum long-term capital gain tax rate moves to 20%. Plus there is a potential bonus Medicare tax of 3.8% if your income exceeds $200,000 single and $250,000 married.

Action to take:

  • Net capital losses against short-term capital gains if possible. Also remember you can net up to $3,000 in excess capital losses against ordinary income.Consider maximizing your child’s unearned income potential prior to the impact of the “kiddie tax” (usually up to $2,000 of unearned income can be taxed at your child’s rate).
  • Review your portfolio and consider the appropriateness of taking long-term gains now versus holding the investment.

2. Last minute charitable donations.Now is the time to finalize your charitable donations. Remember you must always have a receipt (cash donations are no longer deductible without one) and only donate non-cash items in good or better condition. Donations of $250 or more also require an acknowledgement from the charitable organization.

Action to take:

  • Make any last minute donations and collect all applicable receipts.
  • Consider donating appreciated stock to gain additional tax benefits. If you are considering this alternative, it is always best to seek qualified advice prior to making this donation.

3. Fund your retirement accounts.Remember you can still make donations to qualified retirement accounts. Some accounts, like Traditional IRAs and Roth IRAs allow making contributions through April 15th as long as you qualify.

Action to take:

  • If possible, fund your accounts up to the maximum allowable. Don’t forget to take advantage of the catch-up provisions if you are age 50 or over.
  • Consider making contributions this year versus next to minimize your taxable income.

4. Run through other year-end checklist items.

Action to take:

  • Take Required Minimum Distribution from retirement accounts if you are over the age of 70 1/2.
  • Rebalance your investment portfolios as necessary
  • Review any medical and dependent care spending accounts to ensure you do not lose any unspent funds
  • Make contributions to your retirement savings accounts, especially if you are self-employed
  • Consider last minute retirement account conversions, if appropriate
  • Consider donating appreciated stock versus writing a check to a favorite charity
  • Estimate your tax liability and make any required estimated tax payments
  • Make any final gift payments while being aware of the annual gift giving limits
  • Start collecting and organizing your tax records

As a final note, please consider that the unsettled atmosphere in Congress is sure to result in additional tax changes in 2014. So stay alert to those that may impact you.

Enhanced by Zemanta

Simplified Home Office Deduction

Home Office Deduction

Beginning in 2013 there is a simplified way to take a home office expense for a portion of your home. This new ‘safe-harbor’ option greatly simplifies how to record valid expenses for business use of your home. Here is how it works.

You may opt to take your office space square feet times $5 and use this as a valid home office expense up to $1,500 (300 sq. ft.)

  1. This replaces the cumbersome allocation of valid home expenses like electricity, heat, depreciation, and other home expenses that are allocated by a % of the home devoted to your office space.
  2. You may still take property taxes, mortgage interest deductions and casualty losses as itemized deductions on your personal tax return. Better still, you no longer need to allocate these expenses between personal and business use.
  3. Your home office must qualify for the deduction using current home office standards in the tax code. Foremost among these is that your home office must be used regularly and exclusively by the business.
  4. The deduction may not be taken in excess of available business revenue.
  5. You may still take other qualified business expenses unrelated to the home. This “safe-harbor” calculation is meant to simplify the household expense allocation process only.

What you should know

  • The IRS estimates 3.4 million taxpayers used 1.6 million hours to calculate the home office deduction’s 43 line form to allocate their home office use.
  • When the IRS reviews these returns in the future, it hopes to save a tremendous amount of time and effort required in prior years to confirm the accuracy of the old home office allocation.
  • Since 2013 is the first year of this new provision, you will probably need to conduct the home office use calculation using the old method to ensure the safe-harbor opportunity makes sense for you.

Further Reference :

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Simplified-Option-for-Home-Office-Deduction

 

 

 

Enhanced by Zemanta