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Standard Mileage Rates for 2022
Starting January 1, 2022, the standard mileage rates for the use of a car, van, pickup, or panel truck are as follows:
- 58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021
- 18 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021, and
- 14 cents per mile driven in service of charitable organizations. The charitable rate is set by statute and remains unchanged.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas, and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.
Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.
Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.
Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses.
Leased vehicles. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.
If you have any questions about standard mileage rates or which driving activities you should keep track of as the new tax year begins, do not hesitate to contact the office.
Why Using the Correct Filing Status Matters
As taxpayers get ready for the upcoming filing season, one needs to know their correct filing status. A taxpayer’s filing status defines the type of tax return form they should use when filing their taxes. Filing status can affect the amount of tax they owe, and it may even determine if they have to file a tax return at all.
There are five IRS filing statuses. They generally depend on the taxpayer’s marital status as of Dec.31. However, more than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to pay the least amount of tax.
When preparing and filing a tax return, the filing status affects:
- If the taxpayer is required to file a federal tax return
- If they should file a return to receive a refund
- Their standard deduction amount
- If they can claim certain credits
- The amount of tax they should pay
Here are the five filing statuses:
- Single. Normally this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.
- Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
- Married filing separately. Married couples can choose to file separate tax returns. When doing so it may result in less tax owed than filing a joint tax return.
- Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.
- Qualifying widow(er) with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.
Not sure which filing status you should use this year? Help is just a phone call away.
Tax Credits for Accommodating Disabled Workers
Businesses that make structural adaptations or other accommodations for employees or customers with disabilities may be eligible for tax credits and deductions. Let’s take a look at a few of the tax incentives that are available to encourage employers to hire qualified people with disabilities – and offset some of the costs of providing accommodations.
Disabled Access Credit
The disabled access credit is a non-refundable credit for small businesses that have expenses for providing access to persons with disabilities. An eligible small business earned $1 million or less or had no more than 30 full-time employees in the previous year.
The business can claim the credit each year they incur access expenditures. Eligible access expenditures must be reasonable and necessary to accomplish the following purposes and include amounts paid or incurred:
- To remove barriers that prevent a business from being accessible to or usable by individuals with disabilities – but do not include expenditures paid or incurred in connection with any facility first placed in service after November 5, 1990;
- To provide qualified interpreters or other methods of making audio materials available to deaf and hard of hearing individuals;
- To provide qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments; or
- To acquire or modify equipment or devices for individuals with disabilities.
Barrier Removal Tax Deduction
The architectural barrier removal tax deduction encourages businesses of any size to remove architectural and transportation barriers to the mobility of people with disabilities and the elderly. Businesses may claim a deduction of up to $15,000 a year for qualified expenses on items that normally must be capitalized.
Businesses claim this deduction by listing it as a separate expense on their income tax return. Also, businesses may use the disabled tax credit and the architectural/transportation tax deduction together in the same tax year if the expenses meet the requirements of both sections. To use both, the deduction is equal to the difference between the total expenses and the amount of the credit claimed.
Work Opportunity Tax Credit
The work opportunity tax credit is available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. This includes people with disabilities and veterans.
The maximum amount of tax credit for employees who worked 400 or more hours of service is:
- $2,400 or 40% of up to $6,000 of first year wages, for qualifying individuals.
- $9,600 or 40% of up to $24,000 of first year wages for certain qualified veterans.
A 25% rate applies to wages for individuals who work at least 120 hours but less than 400 hours for the employer.
Don’t hesitate to contact the office with any questions about these and other small business tax credits.
Watch Out for Holiday Gift Card Scams
There’s never an off-season when it comes to scammers and thieves who want to trick people into scamming them out of money, stealing their personal information, or talking them into engaging in questionable behavior with their taxes. While scam attempts typically peak during tax season, taxpayers need to remain vigilant all year long. As such, it is once again time to remind taxpayers that while gift cards make great presents for loved ones, they cannot be used to pay taxes.
Nonetheless, that doesn’t stop scammers from targeting taxpayers by asking them to pay a fake tax bill with holiday gift cards. Scammers may also use a compromised email account to send emails requesting gift card purchases for friends, family, or co-workers.
How the Scam Works:
- The most common way scammers request gift cards is over the phone through a government impersonation scam. However, they will also request gift cards by sending a text message, email, or through social media.
- A scammer posing as an IRS agent will call the taxpayer or leave a voicemail with a callback number informing the taxpayer that they are linked to some criminal activity. For example, the scammer will tell the taxpayer their identity has been stolen and used to open fake bank accounts.
- The scammer will threaten or harass the taxpayer by telling them that they must pay a fictitious tax penalty.
- The scammer instructs the taxpayer to buy gift cards from various stores.
- Once the taxpayer buys the gift cards, the scammer will ask the taxpayer to provide the gift card number and PIN.
How to Know if it’s Really the IRS calling:
The IRS will never:
Call to demand immediate payment using a specific payment method such as a gift card, prepaid debit card, or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
Demand that taxpayers pay taxes without the opportunity to question or appeal the amount they owe. All taxpayers should be aware of their rights.
Threaten to bring in local police, immigration officers, or other law enforcement to have the taxpayer arrested for not paying.
Threaten to revoke the taxpayer’s driver’s license, business licenses or immigration status.
If You’ve Been Targeted by a Scammer:
- Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their IRS Impersonation Scam Reporting webpage. They can also call 800-366-4484.
- Report phone scams to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. They should add “IRS phone scam” in the notes.
- Report threatening or harassing telephone calls claiming to be from the IRS to firstname.lastname@example.org. Please include “IRS phone scam” in the subject line.
What To Know About Keeping Good Tax Records
It’s January and tax season is right around the corner. For many people that means scrambling to collect receipts, mileage logs, and other tax-related documents needed to prepare their tax returns. If this describes you, chances are, you’re wishing you’d kept on top of it during the year so you could avoid this scenario yet again. With this in mind, here are seven suggestions to help taxpayers like you keep good records throughout the year:
- Taxpayers should develop a system that keeps all their important info together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.
- Throughout the year, they should add tax records to their files as they receive them. Having records readily at hand makes preparing a tax return easier.
- It may also help them discover potentially overlooked deductions or credits. Taxpayers should notify the IRS if their address changes. They should also notify the Social Security Administration of a legal name change to avoid a delay in processing their tax return.
- Records that taxpayers should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.
- Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
- In general, taxpayers should keep tax records for three years from the date they filed the return.
- For business taxpayers, there’s no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. The records should confirm income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
Well-organized records make it easier for taxpayers to prepare their tax returns. Good recordkeeping also helps provides answers in the event that a taxpayer’s return is selected for examination or if the taxpayer receives an IRS notice. If you need help setting up a recordkeeping system that works for you, don’t hesitate to call.