Tax Tips for November 2023

by | Nov 1, 2023 | Tax Tips

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New Per Diem Rates for Business Travel

The IRS has announced the per diem rates for ordinary and necessary business travel expenses in fiscal year 2023-24:

  • When using the high-low substantiation method, the rate for travel to high-cost localities is $309 per day and the rate for all other continental United States (CONUS) localities is $214 per day.
  • For meals, the rate is $74 (high) and $64 (all other) per day.
  • The rate for incidental expenses when traveling in or outside the CONUS is $5 per day.

These rates are effective beginning Oct. 1, 2023. Questions about per diem rates or other options for deducting business travel expenses? Contact the office.

Follow IRS Rules to Nail Down a Charitable Tax Deduction

Donating cash and property to your favorite charity is beneficial to the charity, but also to you in the form of a tax deduction if you itemize. However, to be deductible, your donation must meet certain IRS criteria.

First, the charity you’re donating to must be a qualified charitable organization, with tax-exempt status. The Exempt Organizations Search tool on the IRS website allows users to search for a specific organization and check its federal tax-exempt status.

Second, contributions must be actually paid, not simply pledged. So, if you pledge $5,000 in 2023 but have paid only $1,500 by Dec. 31, 2023, you can deduct only $1,500 on your 2023 tax return.

Third, substantiation rules apply, and they vary based on the type and amount of the donation. For example, some donated property may require you to obtain a professional appraisal of value.

Many additional rules and limits apply to the charitable donation deduction. Contact the office to learn a more.


Withdrawing ERC Claims

Recently, the IRS halted processing of claims for the Employee Retention Credit (ERC), due to a high volume of fraudulent claims. The moratorium is through at least the end of 2023. ERC claims that were already filed are now subject to longer processing, including heightened scrutiny to weed out fraud.

Now the IRS is creating a path for businesses that are concerned they may be victims of aggressive ERC marketing schemes. Eligible businesses can opt to withdraw unprocessed claims that they now believe may be invalid. Among other things, to be eligible, the business must have made the claim on an adjusted employment return that included no other adjustments and must want to withdraw the entire amount of the ERC claim.

Withdrawing a claim can allow the business to avoid receiving a refund for which it’s ineligible (and that would have to be repaid) as well as interest and penalties. Businesses that aren’t eligible to use the withdrawal process may be able to reduce or eliminate their ERC claim by filing an amended return.