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.

401k and Retirement Plan Limits for the Tax Year 2017

401k and Retirement Plan Limits for the Tax Year 2017

On October 27, 2016, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017.

Highlights of Limitations That Remain Unchanged From 2016

  • The contribution limit for employees who participate in 401k, 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401k, 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Chart of Select Limits
401k Plan Limits for Year 2017 2016 2015 2014 2013 2012 2011
401k Elective Deferrals $18,000 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
Annual Defined Contribution Limit $54,000 $53,000 $53,000 $52,000 $51,000 $50,000 $49,000
Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 $255,000 $250,000 $245,000
Catch-Up Contribution Limit $6,000 $6,000 $6,000 $5,500 $5,500 $5,500 $5,500
Highly Compensated Employees $120,000 $120,000 $120,000 $115,000 $115,000 $115,000 $110,000
 
Non-401k Related Limits
403(b)/457 Elective Deferrals $18,000 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
SIMPLE Employee Deferrals $12,500 $12,500 $12,500 $12,000 $12,000 $11,500 $11,500
SIMPLE Catch-Up Deferral $3,000 $3,000 $3,000 $2,500 $2,500 $2,500 $2,500
SEP Minimum Compensation $600 $600 $600 $550 $550 $550 $550
SEP Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 $255,000 $250,000 $245,000
Social Security Wage Base $127,200 $118,500 $118,500 $117,000 $113,700 $110,100 $106,800

Tax Tips – Individuals Selling Their Home

Sold SignIf you’re selling your main home this summer or sometime this year, we have some helpful tax tips for you. Even if you make a profit from the sale of your home, you may not have to report it as income.

Here are some tips to keep in mind when selling your home.

  1. If you sell your home at a gain, you may be able to exclude part or all of the profit from your income. This rule generally applies if you’ve owned and used the property as your main home for at least two out of the five years before the date of sale.
  2. You normally can exclude up to $250,000 of the gain from your income ($500,000 on a joint return). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013.
  3. If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return.
  4. If you can’t exclude all of the gain, or you choose not to exclude it, you’ll need to report the sale of your home on your tax return. You’ll also have to report the sale if you received a Form 1099-S, Proceeds From Real Estate Transactions.
  5. Use IRS e-file to prepare and file your 2013 tax return next year. E-file software will do most of the work for you. If you prepare a paper return, use the worksheets in Publication 523, Selling Your Home, to figure the gain (or loss) on the sale. The booklet also will help you determine how much of the gain you can exclude.
  6. Generally, you can exclude a gain from the sale of only one main home per two-year period.
  7. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is usually the one you live in most of the time.
  8. Special rules may apply when you sell a home for which you received the first-time home buyer credit. See Publication 523 for details.
  9. You cannot deduct a loss from the sale of your main home.
  10. When you sell your home and move, be sure to update your address with the IRS and the U.S. Postal Service. File Form 8822, Change of Address, to notify the IRS.

Further Reference:

IRS YouTube Videos:

IRS Podcasts:

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Tax Tips – Give Withholding and Payments a Check-up

Taxes Withholding

Some people are surprised to learn they’re due a large federal income tax refund when they file their taxes. Others are surprised that they owe more taxes than they expected. When this happens, it’s a good idea to check your federal tax withholding or payments. Doing so now can help avoid a tax surprise when you file your 2013 tax return next year.

Here are some tips to help you bring the tax you pay during the year closer to what you’ll actually owe.

Wages and Income Tax Withholding

New Job. Your employer will ask you to complete a Form W-4, Employee’s Withholding Allowance Certificate. Complete it accurately to figure the amount of federal income tax to withhold from your paychecks.
Life Event. Change your Form W-4 when certain life events take place. A change in marital status, birth of a child, getting or losing a job, or purchasing a home, for example, can all change the amount of taxes you owe. You can typically submit a new Form W–4 anytime.
IRS Withholding Calculator. This handy online tool will help you figure the correct amount of tax to withhold based on your situation. If a change is necessary, the tool will help you complete a new Form W-4.

Self-Employment and Other Income

Estimated tax. This is how you pay tax on income that’s not subject to withholding. Examples include income from self-employment, interest, dividends, alimony, rent and gains from the sale of assets. You also may need to pay estimated tax if the amount of income tax withheld from your wages, pension or other income is not enough. If you expect to owe a thousand dollars or more in taxes and meet other conditions, you may need to make estimated tax payments.
Form 1040-ES. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you need to pay estimated taxes on a quarterly basis.
Change in Estimated Tax. After you make an estimated tax payment, some life events or financial changes may affect your future payments. Changes in your income, adjustments, deductions, credits or exemptions may make it necessary for you to recalculate your estimated tax.
Additional Medicare Tax. A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold amount based on the individual’s filing status. For additional information on the Additional Medicare Tax, see our questions and answers.
Net Investment Income Tax. A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts.

Further Reference:

IRS YouTube Videos:

IRS Podcasts:

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