IRS Increases Mileage Rates
The IRS has increased the standard mileage rates to be
used in computing the deductible costs of operating a
vehicle for business or when driving for medical or
moving reasons. The new rates will apply to vehicle
mileage from July 1, 2011, through December 31, 2011.
The revised rates are 55.5 cents per mile for business driving and 23.5 cents for medical and moving driving. The rate for charitable driving is fixed by law and remains at 14 cents per mile.
According to the IRS, mileage rates were raised for the
second half of 2011 due to the recent increases in the
price of fuel. The rates for the first half of 2011
(January 1 through June 30, 2011) are unchanged; they
remain at 51 cents per mile for business driving and 19 cents per mile for medical or moving expenses.
Instead of using standard mileage rates, you have the
option of calculating the actual costs of using a
vehicle for business, medical, or moving purposes.
Animal Lovers Win Court Case
If you provide care for stray or feral animals in your
home for an IRS-approved charity, you may be able to
take a tax deduction for your out-of-pocket expenses.
A recent U.S. Tax Court judge ruled that a taxpayer who fostered feral and stray cats in her home could deduct amounts she spent for food, veterinarian bills, litter, and other unreimbursed expenses incurred to help the charity in its mission.
An important requirement for such expenses to be
deductible: the taxpayer must keep records of the
expenses, and if they exceed $250, the charity must provide a contemporaneous written acknowledgment of the expenses as a charitable donation.
The Humane Society hopes to get the word out on this case, stating that thousands of members do volunteer work such as this and spend their own money to support the mission of local animal shelters and rescue groups.
It's time for a 2011 tax-cutting checkup
There are several tax breaks slated to end after this
year. Make time to review your tax situation now to see
if you can take advantage of any of the following to lower your 2011 tax bill:
* the option for deducting state and local sales taxes in lieu of deducting state and local income taxes.
* the above-the-line deduction of up to $4,000 for higher education expenses.
* the above-the-line deduction of up to $250 for classroom supplies purchased by teachers.
* the option for taxpayers 70½ or older to make tax-free contributions of up to $100,000 from an IRA to charity.
Also, don't forget to check your exposure to the
alternative minimum tax (AMT) for 2011. The "Tax Relief
Act of 2010" increased the AMT exemption amount for 2011 to $48,450 for single taxpayers and to $74,450 for couples. The AMT is a separate tax calculation originally designed to apply only to the wealthy. In recent years, the AMT has begun to hit even middle-income taxpayers.
Call us if you would like to schedule a review to
discuss the best 2011 tax-saving strategies for your
Who should take advantage of the IRA charitable
Last year's tax law extended the "charitable IRA
rollover" rule through the end of 2011. Taxpayers who
are 70½ or older may make tax-free distributions of up to $100,000 directly to a charity from their IRA. The
rollover fulfills the required minimum distribution (RMD) rule, and the rollover amount is not included in
If you or someone in your family could qualify to make
a charitable IRA rollover, should it be considered?
Here are some of the situations in which this tax break could be beneficial.
* You have to take the RMD, but you don't need the money and you don't want to pay tax on the distribution.
* You want to give to charity, but you don't itemize
deductions so any contribution you make would not be
* You do itemize deductions, but your charitable contribution deduction would be affected by the 50%/30% of AGI limit.
* Having to include your RMD in income would result in the phasing out of other deductions and credits based on adjusted gross income.
The charitable IRA rollover is a powerful tool for tax
planning. But remember, as it now stands, this provision
will expire December 31, 2011. Give us a call if you would like to analyze whether this option makes tax
sense for you or a family member.
FUTA surcharge expires
The IRS reminds employers that the Federal Unemployment Tax Act surcharge of 0.2% expired on June 30, 2011. This means that the FUTA rate for employers went to 6.0% starting on July 1, 2011.
The IRS is currently working to revise Form 940, Employer’s Annual Federal Unemployment Tax Return, to accommodate the two different rates and the form will be available before the Jan. 31, 2012, due date.
The surcharge was originally enacted in 1976, and Congress has extended it several times since. Unemployment benefits are not tied to the surcharge, so the expiration of the surcharge will not affect current or future unemployment benefits.
Men Focus More on Financial Planning than Women
The survey, by Genworth, found that 54 percent of men focus on financial planning at least once a week, compared to 42 percent of the women surveyed. However, the survey also found that more women than men said that financial wellbeing was important to maintaining a balanced life.
In addition to gender differences, the survey also found differences in financial planning attitudes and the impact on health among people with different ages, incomes and household sizes. Those between the ages of 18 to 24 were more likely (58 percent) to take time to focus on planning for their financial health at least once a week compared to those between the ages of 35 to 44 (39 percent), 45 to 54 (47 percent), 55 to 64 (48 percent) and over 65 (39 percent).
Over 66 percent of the survey respondents ages 18 to 54 said that worries over their personal financial situation have an impact on their health, while less than 52 percent of respondents ages 55 and above agreed.
Financial wellbeing was equally important to all income groups, with more than 60 percent of respondents across income levels below $75,000 identifying financial wellbeing as needed for a balanced life.
Over 70 percent of individuals making over $50,000 said they felt good about their ability to manage the balance of physical and financial stress, while 61 percent or less of individuals below $50,000 in household income agreed.
“We found it interesting that those who said they need financial wellbeing to maintain a balanced life—particularly women—are less likely to spend time focusing on financial planning,” said Genworth spokesperson Wendy Boglioli, a 1976 Olympic gold medalist in swimming. “Living well now and in retirement requires a balance between being both financially sound and physically fit. These factors are often overlooked due to busy lifestyles.”
Households making less than $25,000 are most likely to feel like they need help but don't know where to get it (21 percent of respondents), while 15 percent or less of all of the other income groups said they felt the same way.
Survey respondents in larger households said that worries over their personal financial situations had an impact on their health. That compared to smaller households, which are more likely to feel good about their ability to manage and balance physical and financial stress. Sixty-six percent of the survey respondents with households that have three or more members said that worries over their personal financial situation had an impact on their health, while less than 58 percent of respondents with one or two household members agreed.