2023 Federal Standard Mileage Rates

Beginning on Jan. 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 65.5 cents per mile for business miles driven

• 22 cents per mile driven for medical or moving purposes

• 14 cents per mile driven in service of charitable organizations

The 2022 mileage rates were:

• 62.5 cents per mile for business miles driven

• 22 cents per mile driven for medical or moving purposes

• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

2018 Federal Standard Mileage Rates.

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 54.5 cents per mile for business miles driven
• 18 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The 2017 mileage rates were:

• 53.5 cents per mile for business miles driven
• 17 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

6 Tax Breaks Reauthorized for Tax Year 2015

1. Teachers' Deductions for Certain Expenses

Primary and secondary school teachers buying school supplies out-of-pocket could possibly take an above-the-line deduction of up to $250 for unreimbursed expenses. This deduction was made permanent and indexed for inflation.

2. State and Local Sales Taxes

Deductions for state and local sales tax was made permanent. Taxpayers that pay state and local sales tax can deduct the amounts paid on their federal tax returns (instead of local and state income taxes) as long as they itemize.

3. Mortgage Insurance Premium

Mortgage insurance premiums (PMI) are paid by homeowners with less that 20 percent equity in their homes. These premiums were deductible in tax years 2013, 2014, and again in 2015. This deduction has also been extended through 2016.

4. Exclusion of Discharge of Principal Residence Indebtedness

Typically, forgiven debt is considered taxable income in the eyes of the IRS. There is a tax provision that has been extended through 2016 allowing homeowners whose homes have been foreclosed on or subjected to short sale to exclude up to $2 million of canceled mortgage debt. Also included are taxpayers seeking debt modification in their home.

5. Energy Efficient Improvements (Including Appliances)

This tax break has been around for some time, but if you made your home more energy efficient in 2015, now is the time to take advantage of this tax credit on your 2015 return. The credit reduces your taxes instead of a deduction that reduces your taxable income and is 10 percent of the cost of building materials. These items include insulation, new water heaters, or a wood pellet stove.

This tax is cumulative, so if you have taken the credit in any tax year since 2006, you cannot take the full $500 tax credit this year. For example if you took a credit of $200 in 2013 the maximum you could take is $300.

6. Qualified Tuition Expenses

The deduction for qualified tuition and fees, which has been extended through 2016, is an above-the-line tax deduction. This means that you don't have to itemize your deductions to claim the expense. Taxpayers with income of up to $130,000 (joint) or $65,000 (single) can claim a deduction for up to $4,000 in expenses. Taxpayers with income over $130,000 but under $160,000 (joint) and over $65,000 but under $80,000 (single) can take a deduction of up to $2,000. Taxpayers with income over these amounts are not eligible for the deduction.

Qualified education expenses are defined as tuition and other related expenses that are required for enrollment or attendance at an eligible educational institution. These expenses include student-activity fees and expenses for books, supplies, and equipment required by the institution.

IRS Announces Standard Mileage Rates in 2016

Starting on January 1, 2016 the standard mileage rates for the use of a car, van, pickup or panel truck are:

• 54 cents per mile for business miles driven, down from 57.5 cents in 2015
• 19 cents per mile driven for medical expenses, down from 23 cents in 2015
• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. This includes depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on variable costs, for example gas and oil. The charitable rate is set by law.

Year End Checklist for Employees

With the end of the year drawing near, now is a good time to spend a little tax planning.

• Check your withholding. Is it in line with your income and deductions? If not, file a new W-4 with your employer
• Review your employee benefits. Are you taking advantage of all your employer has to offer?
• Charitable Contributions - donate by 12/31/14 for deductions this year.
• Budgeting - how are you doing on this years goals? What are your goals for next year?

A little planning now can reduce your taxes in April!

Year End Checklist for the Self Employed

Now is a great time to take a quick look at your tax situation for this year as there is still time to make needed adjustments. Here is a short checklist:

• žCheck your tax deposits to avoid underpayment penalties. Your final quarterly tax deposit is due on January 15, 2015.

• Check your income. If more or less than you predicted some year in tax planning may be in order.

• Check our expenses. Speed up or slow down your spending as needed.

• Retirement planning, now is a good time to review your plan or start one.

Taking a few minutes now can improve your tax situation.

Self Employeed? Here are some tIps on estimated taxes

Self employeed people must estimate their taxes and send their payments to the IRS quarterly. But with a variable income how do you determine what you owe? The easiest way to tackle this problem is to have me do it for you. A service I include if I file your income tax return. But if you would like to do this on your own, here are some tips:

1. Use your prior years data. If you think this year will be comparable to last year simply take your total unfunded tax liability and divide it by four.

2. Pay as you go. Take your prior year income tax rate. Deduct this percentage from every deposit you make and keep it in a separate account. Each quarter pay this percentage to the IRS.

3. Use the method the IRS suggests. Go to the IRS site and open Publication 505. Read through the instructions then complete the worksheet.

4. Plan ahead. Don't get surprised next year.

You can pay estimated taxes any time. But here are the required dates set by the IRS:

April 15th

June 15th

September 15th

January 14th of the following year

You can make your payments electronically or by mail.

Failure to pay your taxes timely will result in penalties and interest. So if you are not already making estimated taxes, it is time to get started.

Federal Tax Return - Standard Mileage Rates.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56 cents per mile for business miles driven
• 23.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

The 2013 mileage rates were:

• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Changes to Itemized Deduction for 2013 Income Tax Returns - Medical Expenses

For those who itemize their deductions on Form 1040, Schedule A, new rules may affect your medical expense deduction. This new rules raises the threshold that unreimbursed medical and dental expenses you paid for yourself, your spouse, and your dependents must reach before a deduction is permitted.

Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those which are not covered by health insurance, that exceed 10 percent of their adjusted gross income. Previously, the law permitted deductions for unreimbursed expenses in excess of 7.5% of their adjusted gross income.

There is a temporary exemption for taxpayers age 65 and older

There is a temporary exemption for individuals age 65 and older until Dec. 31, 2016. If you are 65 years or older, you may continue to deduct total medical expenses that exceed 7.5% of your adjusted gross income through 2016. If you are married and only one of you is age 65 or older, you may still deduct total medical expenses that exceed 7.5% of your adjusted gross income.

This exemption is temporary. Beginning Jan. 1, 2017, the 10% threshold will apply to all taxpayers, including those over 65.

It's time again to get your income tax return prepared!

Don't procrastinate, get started today. Here is a short checklist to get you started:

1. Collect your paperwork. Start with a list of the items you will need (the checklist I provided you) or use your return from last year as a guide.

2. Add any new items from new sources of income, investments, or expenses.

3. Make a list of questions or changes you expect this year or in the coming years.

3. Set your tax appointment or send your tax items to your accountant.

The aftermath of the fiscal cliff, will you feel it?

Now that the year is over so is all the talk about the fiscal cliff. Will the outcome affect you? Most likely yes. The biggest change was the end of the reduced social security taxes withheld from your paycheck. Your social security withholding tax went up from 4.2% to 6.2% for all paychecks in 2013.  High income taxpayers (over $250,000) may see their income taxes going up and their deductions being reduced. If this is you, some extra tax planning will be needed this year.