Friday, December 10, 2010

IRS Releases Mileage Rates for 2011

The standard mileage rates were recently updated and released by the IRS. The IRS issued the notice of the rates in both Revenue Procedure 2010-51 and Notice 2010-88 for 2011.

The standard mileage rates for 2011 will be:

Business use: 51 cents per mile
Charitable use: 14 cents per mile
Medical care: 19 cents per mile

For automobiles used for business purposes, the portion of the standard mileage rate treated as depreciation will be 22 cents per mile for 2011.

Just as a reminder the rates for 2010 were:

Business use: 50 cents per mile
Charitable use: 14 cents per mile
Medical care: 16.5 cents per mile

Wednesday, November 17, 2010

Arizona Tax Credits - 2010

As we approach the end of 2010, there are still many steps you can take to reduce your Arizona tax liability. Arizona offers several tax credits:

1) Credit for contributions to Private School Tuition Organization. You may receive up to $500 ($1,000 MFJ) in state tax credit by contributing to one of the many private schools or tuition organizations in the state. To see a list of qualifying organizations, click here: School Tuition Organizations for Individual Donations

2) Credit for Donations to the Military Family Relief Fund. Make a cash contribution of $200, ($400 if MFJ) and support our AZ Military Families in need. Visit the Arizona Department of Veteran Services website for more information.

3) Credit for Contributions Made or Fees Paid to a Public School. Make a cash contribution of $200, ($400 if MFJ) to an AZ Public School (K - 12th grade). Help support your local school or find a school that can use the financial assistance. You can search for schools by name on the AZ Department of Education website.

4) Credit for Contributions to Organizations That Provide Assistance to the Working Poor. Make a cash contribution of $200, ($400 if MFJ) to a qualified charitable organization. For a list of current qualified organizations, click here.

By choosing the above listed credit options, you can designate where your money is directed.

A few notes about these credits:
- may also qualify as charitable donations on the Federal tax return.
- the credits are non-refundable, meaning it will reduce your tax liability by the amount of the credit and any excess credit will not be refunded to the taxpayer.

If you are unsure about taking advantage of these credits, please give the office a call and a 2010 tax plan can be completed to determine your eligibility for these credits.

Be on the lookout for more tax items in the next few days/weeks.

Saturday, November 6, 2010

2010 Tax Changes

There have been a lot of changes that have gone into effect for this year and that affect planning for next year as well. For individuals, there is the opportunity to convert traditional IRA retirement accounts to Roth IRA accounts and pay the tax over two years instead of all at once and without regard to income limits (prior to this year and after this year income limitations will apply again). Also there is still the chance to take advantage of energy efficient improvements to your principal residence, some of these credits expire after the end of this year. Considerations for 2011 include whether tax rate reductions will be retained or if resetting of rates will take effect and automatically increase taxes for income levels (mainly because the 10% tax bracket will be eliminated and so lower income people will be affected to a greater amount).

For small businesses, there is a tax credit if you provide health insurance for non-owners or family of owners, subject to certain limits for wages and number of employees. Businesses also are continuing to be incentivized to make capital improvements through increased section 179 expense limitations.

This is just a quick summary. I will try to share other impacts over the next few entries. Please take some time to review this year to avoid surprises at tax time while you can still make changes before year end.

Tuesday, May 18, 2010

Arizona Income Withholding Changes

Many Arizona clients have been getting notice that Arizona is making a change to the way withholding will be figured for income subject to withholding. A little background: historically Arizona residents selected withholding based on a percentage of the amount of Federal withholding, so you would select 20% and if you Federal withholding was $100 that would result in $20 in Arizona withholding.

This change is slated to take effect for payments on 7/1/2010 through the end of the year. The change results now in a calculation that will be a percentage of your taxable income that is paid by that employer or pension provider. The choices are 1.8%, 2.7%, 3.6%, 4.2% or 5.1% and you can elect to have an additional dollar amount withheld per paycheck or pension payment.

I have been fielding several phone calls or reqeuests for assistance with this issue. The calculation can be straight forward but if you need assistance you can contact the offices of Gaylor Tax Services, LLC for assistance.

If your payroll or human resources department has not sent out the form, you can download the form at the Arizona Department of Revenue Website here

Wednesday, January 27, 2010

Haiti Donations and Tax Deductions

A recent tax law change may affect donations being made related to charities providing earthquake relief in Haiti, you may be able to claim those donations on your 2009 tax return.

Per the IRS here are 10 important facts you should know about this special provision:

1 - A new law allows you to claim donations for Haitian relief on your 2009 tax return, which you will be filing this year.

2 - The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti.

3 - To be eligible for a deduction on the 2009 tax return, donations must be made after Jan. 11, 2010 and before March 1, 2010.

4 - In order to be deductible, contributions must be made to qualified charities and can not be designated for the benefit of specific individuals or families.

5 - The new law applies only to cash contributions. (Cash Contributions mean non-goods donations, like clothing, food, etc.)

6 - Cash contributions made by text message, check, credit card or debit card may be claimed on your federal tax return.

7 - You must itemize your deductions in order to claim these donations on your tax return.

8 - You have the option of deducting these contributions on either your 2009 or 2010 tax return, but not both.

9 - Contributions made to foreign organizations generally are not deductible. You can find out more about organizations helping Haitian earthquake victims from agencies such as the U.S. Agency for International Development ( www.usaid.gov).

10 - Federal law requires that you keep a record of any deductible donations you make. For donations by text message, a telephone bill will meet the record-keeping requirement if it shows the name of the organization receiving your donation, the date of the contribution, and the amount given. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check or a receipt from the charity. Receipts should show the name of the charity, the date and amount of the contribution.

Do I have to file a Tax Return?

"Do I have to file a Tax Return?" I am approached with this question on a frequent basis, whether the question is about a child that started working or for a new business venture that has just started. The answer is almost always the same - "It depends". There are many factors that can effect whether you should file a return or not. A few of the factors for this year include the below items to consider:

- Federal Income Tax Withheld - even if you are below the income requirements to file, you should file to get a refund of Federal and possibly state tax withholding. If you don't file, you can't get a refund and there is a limitation on the time period you can claim a refund. Don't miss that opportunity.

- Making Work Pay Credit - new for 2009 is a credit for earned income which could be as much as $800 for married couple filing a joint return and $400 for other taxpayers (single, head of household, married filing separately).

- Earned Income Tax Credit - If you worked and did not earn a lot of money, you may be eligible for this refundable credit. You need to file to be able to claim this.

- Additional Child Tax Credit - this is a refundable tax credit that may be available to you if you have at least one qualifying child (child under age 17 at the end of 2009) and you did not get the full amount of the Child Tax Credit.

- Refundable American Opportunity Credit - this education tax credit is available for 2009 & 2010. This credit is available for the first 4 years of postsecondary education and provides a maximum credit of $2,500 per student.

- First-Time Homebuyer Credit - Just because you bought a home and qualify for the credit is not enough to receive the possible $8,000 tax credit. You must file a tax return to claim the credit and receive your refund. There are certain requirements to qualify for this credit that will be addressed in another posting.

I generally recommend that you consult with a professional to determine your filing requirements if you are uncertain. You may also check out the IRS website and look for the Free File link.