Effective January 1, 2011, the maximum deductible standard mileage rates are:
Business $.51 per mile
Medical and Moving $.19 per mile
Charity $.14 per mile
December 6, 2010
Mileage Rates
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November 19, 2010
Alternative Minimum Tax (AMT)
The big question is whether AMT will effect you. The answer depends on what Congress does. Since both sides of the isle seem determined to “patch” AMT again, it is unlikely you will be effected by AMT this year if you weren’t effected by it in 2009 and things are substantially the same for you.
To know more precisely for your personal situation, ask us.
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2010 Year end tax planning
With a new congress and a lame duck session, this is a very difficult year for tax planning. I encourage you to follow the news in this area. If we assume the Bush tax cuts will be effective for 2011, then we can do the usual things of delaying income to 2011 and accelerating deductions into 2010 as those things are reasonable and possible. If, however, the tax cuts expire, we would want to do the opposite.
I believe Congress will do something. I believe Congress will continue working on taxes well into 2011.
If you have capital gains available to you, this should be a good time to cash those in, while we are sure we have 15% maximum tax rate on most long term (greater than one year) gains. If nothing else, you can re-buy the stock later at a higher basis. Beware of the wash sale rules, however.
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September 7, 2010
Health Savings Accounts and Flexible Spending Accounts
The health reform act passed last spring included a new limitation for health savings accounts. Effective January 1, 2011, you will no longer be able to buy over the counter medications except insulin with your health savings account money without a prescription. So, consider stocking up on your over the counter medications before the end of December.
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June 28, 2010
Loop Holes
The US Senate recently failed to pass a tax extenders bill which would have taxed S-Corporations with 3 or fewer shareholders who provide professional services medicare and social security taxes on the net income of their businesses. Currently S-Corporation shareholders do not pay this tax on the net income of their businesses. This seemed to unjustly focus on just a few S-Corporations who take advantage of the tax benefits there of. This one did not pass, but watch for future attempts.
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Tanning tax
The federal government will begin taxing users of tanning services a 10% excise tax July 1, 2010. One of the many ways Congress finds to increase tax revenue with out “raising” taxes.
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WA state taxes
As WA state struggles to balance its budget, it changed some taxes. One of the changes is how to determine whether you are doing business in the state suffinciently to owe Business and Occupation tax. New rules went into effect June 1, 2010. These rules particularly effect the service and financial services sectors. So, if you have customers in WA state, make sure you learn the rules.
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May 11, 2010
Should you convert to a Roth
Tax laws are quite favorable this year for converting your IRA into a Roth. Whether you should is the question. The conversion requires paying the taxes on the IRA either this year or deferred over 2011 and 2012. This can be beneficial for some and not so beneficials for others. The Roth conversions benefits the most when you pay the taxes for the conversion with non-retirement money, you have 20 or more years before you need to begin drawing money out of the Roth and you expect your future tax rates to be higher than they are currently. The Roth does not have mandatory withdrawal rules, so the money can be left to grow much longer than a traditional IRA. However, IRAs converted to Roths face a penalty for withdrawal within five years of the conversion. Paying the taxes for the conversion with non-retirement money allows all of the principal to continue growing. In some cases this scenario is better than even having lower tax brackets in the future. To know whether you would be better off with a conversion means a discussion with your tax preparer and financial advisor.
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March 7, 2010
Personal Property Taxes
One of the many taxes businesses have to pay is a tax on the equipment, supplies and professional libraries on hand at mid-night December 31. This tax is the same rate as real property tax. It is assessed by and paid to the County. Oregon’s report was due March 1st, Washington’s are due April 30th. This tax comes as a surprise to many business owners. If you have not filed in previous years and/or you have not received your 2010 report by early March for Oregon or early April for Washington, call your County to find out why you haven’t received it.
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