Hello everybody and welcome to the blog section of our exciting new website! In each post we will try to provide information that will be useful to you. If you don’t find the current topic helpful, please feel free to ask any questions about things that you want information on.
I can’t lie, some of the topics will be a little dry because really, who sits there thinking Yeah! Taxes! My favorite subject. But maybe rather you’ll think Uggh taxes but this information is helpful. You never know, you might find just what you need or you might just be entertained because I’m really funny. Just ask anyone. Let’s get to it shall we?
Each year the IRS sets new guidelines for rates/deductions and limits applicable to pretty much everyone. Let’s take a look at the current changes. Hopefully you will find that some of these benefit you.
Mileage For unreimbursed business mileage claimed, the rate allowed by the IRS for business conducted between 1/1/11 and 6/30/11 was .51 cents per mile. On 7/1 that went up to 55.5 cents per mile. That rate remains in effect for 2012.
2012 standard mileage rates for use of a car/van/pickup/panel truck:
- 23 cents per mile medical or moving purposes
- 55.5 cents per mile for business miles driven
- 14 cents per mile driven in service of charitable organizations
Moving mileage: Form 3903 is filed to deduct qualified moving expenses in excess of any employer reimbursements. The deduction is an adjustment to income on line26 of Form 1040.
There are some general rules:
Distance test: to deduct moving expenses, the distance between the taxpayer’s new job location and former house must be at least 50 miles more than the distance between the old job location and former house. If there is no established old job location, the distance test is met if the new workplace is at least 50 miles from the former home.
Time test: Moving costs are deductible only if the taxpayer works as a full-time employee at the new location for at least 39 weeks in the 12-month period following arrival. For married taxpayers, only one spouse needs to satisfy the full-time work test.
There are a few time-related restrictions and exceptions that I’m not noting here.
Other Considerations: The IRS allows a deduction only for a move closely related in time to the start of work at the new job location. Generally, within one year satisfies this requirement.
Armed Forces: Member on active duty does not have to meet distance and time test.
Other tidbits of news include:
Social Security’s minimum base wage has risen from $106,800 to 110,100 this year. The allowance for 401(k) contributions is up from $16,500 to $17,000 this year. As a side note we will be expanding on our 401(k) discussion in columns to come, but know this whether the company that you work for offers matching contributions or not you need to be putting money in your 401(k).
So that was it for this week, hopefully it wasn’t too painful. Stay tuned, send us your questions and have a fantastic week!