2015 Mileage Rates

The IRS has announced the mileage rates for 2015.

Even thought fuel prices continue to decline, and are approaching $2,00 a gallon.  The mileage rate for 2015 is 57.5 an increase from 56 cents per mile in 2014.  This is the rate to use foe business miles.

The rate for medical and moving mileage will decline in 2015 to 23 cents a mile.

The rate to use when using your vehicle related to charity is set by congress (not the IRS) and remains at 14 cents per mile.

Should you have questions, you should contact BDS, or your tax professional.

 

 

IRS Develops “Bill of Rights”

Since 2007 (seven years ago) adopting a Taxpayer Bill of Rights has been a goal of the National Taxpayer Advocate. This goal was listed as the advocate’s top priority in her most recent Annual Report to Congress.

photo credit: Thomas Ormston via photopin cc

photo credit: Thomas Ormston via photopin cc

The Taxpayer Bill of Rights was adopted in June 2014.

Taxpayer Bill of Rights contains 10 provisions. They are:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System

Further explanation on each of the Rights:

1) The Right to Be Informed. Taxpayers have the right to know what they need to do
to comply with the tax laws. They are entitled to clear explanations of the laws and IRS
procedures in all tax forms, instructions, publications, notices, and correspondence. They
have the right to be informed of IRS decisions about their tax accounts and to receive
clear explanations of the outcomes.

2) The Right to Quality Service. Taxpayers have the right to receive prompt, courteous,
and professional assistance in their dealings with the IRS, to be spoken to in a way they
can easily understand, to receive clear and easily understandable communications from
the IRS, and to speak to a supervisor about inadequate service.

3) The Right to Pay No More than the Correct Amount of Tax. Taxpayers have the
right to pay only the amount of tax legally due, including interest and penalties, and to
have the IRS apply all tax payments properly.

4) The Right to Challenge the IRS’ Position and Be Heard. Taxpayers have the right
to raise objections and provide additional documentation in response to formal IRS actions
or proposed actions, to expect that the IRS will consider their timely objections and
documentation promptly and fairly, and to receive a response if the IRS does not agree
with their position.

5) The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are
entitled to a fair and impartial administrative appeal of most IRS decisions, including
many penalties, and have the right to receive a written response regarding the Office of
Appeals’ decision. Taxpayers generally have the right to take their cases to court.

6) The Right to Finality. Taxpayers have the right to know the maximum amount of time
they have to challenge the IRS’ position as well as the maximum amount of time the IRS
has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know
when the IRS has finished an audit.

7) The Right to Privacy. Taxpayers have the right to expect that any IRS inquiry, examination,
or enforcement action will comply with the law and be no more intrusive than
necessary, and will respect all due process rights, including search and seizure protections
and will provide, where applicable, a collection due process hearing.

8) The Right to Confidentiality. Taxpayers have the right to expect that any information
they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law.
Taxpayers have the right to expect appropriate action will be taken against employees,
return preparers, and others who wrongfully use or disclose taxpayer return information.

9) The Right to Retain Representation. Taxpayers have the right to retain an authorized
representative of their choice to represent them in their dealings with the IRS. Taxpayers
have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot
afford representation.

10) The Right to a Fair and Just Tax System. Taxpayers have the right to expect the tax
system to consider facts and circumstances that might affect their underlying liabilities,
ability to pay, or ability to provide information timely. Taxpayers have the right to receive
assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty
or if the IRS has not resolved their tax issues properly and timely through its normal channels.

 

 

photo credit: ChrisM70 via photopin cc

photo credit: ChrisM70 via photopin cc

Paying the IRS – Direct Pay

For years you have been able to pay your credit card bills, utility bills, mortgage, rent, and practically anything else online – but not the IRS.

photo credit: Mark Fidelman via photopin cc

photo credit: Mark Fidelman via photopin cc

Now the IRS has developed a method to make online payments.  It is called IRS “Direct Pay”

It is only designed for individual (1040) payments.

The website is:  www.directpay.irs.gov.

For prior years (1993 – 2013) you can pay:

  • Installment Agreement payments
  • Tax Return Payments
  • Proposed Tax Assessment Payments
  • Amended Return Payments

For last year you can make payments related to filing an extension.

For the current year you can make estimated tax payments

After entering the Direct Pay website you need verify personal information – name, address, date of birth, and a recent year’s filing status.

You then enter the payment amount and reason for payment.

Payments can be set up to pay any of the next 30 days and can be made from any bank account (checking or saving) – but cannot be made with a credit card.

You will not receive confirmation, If you want a copy you must print it

They do not ask for e-mail address and they state they do not retain your bank account info – once the payment is made.

Future plans include options for e-mail confirmation and a one-time registration.

photo credit: arsheffield via photopin cc

photo credit: arsheffield via photopin cc

 

Receiving IRS Transcripts

Now can obtain IRS Transcripts of your account virtually instantly, online.

photo credit: DonkeyHotey via photopin cc

photo credit: DonkeyHotey via photopin cc

This are an valuable tool, if you are applying for a home loan, completing the FASTA, have outstanding IRS – or state Income Tax debt, completing an amended return, or just want to make sure returns are filed.

Transcripts Available:

There are four transcripts you can obtain.

Return Transcript:  This is the line by line listing of amounts on your return. Names, Social Security Numbers, Income, Exemptions, deductions, credits, withholding, and refund amounts are all shown. This is currently available for 2010, 2011. and 2012, and soon 2013. If you are completing an amended return, this tool will give you the information you need from the original return.  If you are completing the FASTA, this will give you all the information you need from your tax return.

Record of Account Transcript:  The Record of Account contains much of the same info as the Return Transcript. Record of Account Transcripts are available back to 2011.

Account Transcript:  This will give you all the payments applied to your account plus penalties, and interest. We find this transcript a good tool to verify that estimated payments were made and properly posted. Account Transcript are available back to 2005.

Wage & Income Transcript:  This will give you transcripts of all information the IRS has on your account. It includes W-2 from employers, 1099s showing amounts of bank interest, dividends, stock sales, and gambling winnings, 1098s showing amounts of mortgage interest paid, K-1s showing income from partnerships, trusts, and S-Corporations. This is a valuable tool when completing an older return that hasn’t been timely filed. Unfortunately it does not show state withholding on wages. The Wage & Income transcript is available back to 2004. The 2013 information will not be available until mid-summer 2014.

Getting Access

To get access to the transcripts you must create a user name and password, and you must have an e-mail account. After you set these up, you will receive an E-mail from the IRS.

After receiving the e-mail from the IRS (it should be quickly so if you don’t receive it in your in box – check your junk e-mail).  You will be asked a series of four questions to determine if you are authorized to see the info.

Then you be asked to set challenge questions so you can obtain access if you forget your passwords.

After setting the challenge questions, you will have access to the info.

photo credit: mtfrazier via photopin cc

photo credit: mtfrazier via photopin cc

2014 Standard Mileage Rates

photo credit: allaboutgeorge via photopin cc

photo credit: allaboutgeorge via photopin cc

If you use your vehicle for business – or medical, or moving, or in service of charitable organizations the IRS has issued new optional standard mileage rates for 2014. The rate for business use is 56 cents per mile. This is a decline from the 2003 rate of 56.5 cents per mile. The business rate can be used by those taxpayers using their personal vehicle in a business they operate or if they work for a company that does not reimburse them for using their personal vehicle. This does not apply to commuting mileage to and from their primary job to their residence. Taxpayers must maintain adequate records (a log indicating dates, miles driven, and business purpose of each trip). Taxpayers have the option of using actual costs including depreciation, fuel, maintenance, insurance etc.

If the actual expense method is used, actual expense must be reduced for any personal mileage used. The rate for medical and moving has also been reduced .5 cent. the new rate is 23.5 cents per mile. Medical mileage includes doctor, lab and hospital visits, even picking up medicine.

However medical mileage is part of total medical deductions which now only the amount over 10% of adjusted gross income is deductible. Moving mileage must be associated with a new job or job transfer to be deductible. There is no change in the mileage rate for vehicles in the service of charitable organizations. The charitable rate which was established by Congress and remains at 14 cents per mile.

photo credit: Sherlock77 (James) via photopin cc

photo credit: Sherlock77 (James) via photopin cc

Same sex marriages

 

Recently the IRS proclaimed that couples of the same sex – that were legally married were required to file married tax returns. They are to file married filing joint or married filing separate – they are no longer authorized to file Single or Head of Household returns.

photo credit: azipaybarah via photopin cc

photo credit: azipaybarah via photopin cc

The proclamation applies to couples that were married in any state that a same sex marriage is legal – regardless of where they currently reside.

To be considered married the couple would be required to have been married in one of the states allowing same sex marriage, and the marriage would be required to have been after the date the state of the marriage began allowing same sex marriage.

The IRS directive specifically states that the state of residence of the taxpayer is not a deciding factor, the deciding factor is the state of the marriage. While Kansas and Missouri do not allow same sex marriage, Iowa, Minnesota, Hawaii, California, and nine other states do allow them. A same sex couple could travel to a state allowing the same marriage, get married, and move to any other state, they would then file a joint tax return.

Same sex couples can also file amended joint return for any “open” years if they were legally married in prior years. Years open to file amended returns are 2010, 2011, and 2012.

Missouri

Missouri was the first state to enact a constitutional amendment prohibiting same sex marriage, on November 14, 1913.

Despite this constitutional amendment, Governor Nixon signed an executive order directing tax offices to accept joint returns from married same sex couples. Therefore, legally married same sex couples will also file married combined, or married separate Missouri returns.

Kansas

Kansas does not allow same sex couples to file joint state returns. Therefore same sex legally married couples would file a married filing joint or married filing separate Federal return, but each partner would be required to file a single Kansas return.

photo credit: Out.of.Focus via photopin cc

photo credit: Out.of.Focus via photopin cc

Health Insurance Notifications

photo credit: Images_of_Money via photopin cc

photo credit: Images_of_Money via photopin cc

Does your business have employees? If the answer is yes then you have a notification requirement!

With the Affordable Care Act (ACA) or “Obamacare” there is notification that should be provided to every employee and to all future new employees. These notices are required by the Department of Labor.

The Department of Labor has provided sample forms and they are different for companies that provide health insurance than companies that do not provide health insurance.

The notice provides the employee with the companies health insurance info as well as information on the Health Insurance “Marketplace”

The employer should complete the information concerning health insurance and provide it to each employee.

These notices should be provided to current employees by October 1, 2013 and to all new employees at the time they are hired.

We recommend employers have the employees acknowledge receipt of the form. An sample acknowledgement is attached.

If you have a company insurance plan, your carrier has provided forms or your company does not provide health insurance the Department of Labor has provided sample notifications: http://bdsaccounting.com/free-business-forms.htm

The current law does not require Employers with total revenues under $500,000 notify employees. However, we recommend that all businesses – even business where the only employee is the business owner – notify all employees.

photo credit: Bill Kramme via photopin cc

photo credit: Bill Kramme via photopin cc

Simplified Method for Home Office Deduction

photo credit: DJ Lein via photopin cc

photo credit: DJ Lein via photopin cc

If you have a business (Schedule C) and you claim the deduction for an office in the home, the IRS has made claiming the deduction easier (and probably better) starting with the 2013 tax year. With the new method the deduction is $5.00 per square foot – up to a max of 300 square feet.  Simply measure the office and calculate. If you itemize your deductions you get the full deduction for mortgage interest and taxes on the Schedule A. The best part is when you sell your home you would no longer be required to re-capture the prior depreciation taken and claim it as income. You have the option of using the traditional method are the new simplified method.

I-9 Employment Eligibility Verification

The Department of Homeland Security has recently undated the I-9, Employment Eligibility Verification.

photo credit: bridget_willard via photopin cc

photo credit: bridget_willard via photopin cc

This new form should be used immediately, and for all newly hired employees after 5/7/2013. This form is not required to be submitted – It should be maintained in your employee files.

I-9 forms must be retained by employers – either three years after the date of hire or for one year after employment is terminated, whichever is later. The form can be downloaded at http://bdsaccounting.com/free-business-forms.htm

 

Mileage Rates for 2013

IRS Mileage Rates

photo credit: allaboutgeorge via photopin cc

photo credit: allaboutgeorge via photopin cc

Effective January 1, 2013 mileage rates allowed will change.  Mileage rates allowed for business use of vehicles will increase back to 56.5 cents per mile.

Medical and Moving mileage rates will be 24 cents per mile.  The rate for using vehicles for charitable causes is established by Congress – and remains at 14 cents per mile.  For additional information on this tax law or other tax issues please contact us @ 816-454-5057 or dclemens@bdsaccounting.com