Mileage Rates Changed beginning July 1 2011
The IRS standard mileage rate for the final six months of 2011 was increased as a result of the recent increase in gasoline prices. The IRS usually only adjusts this rate annually in the fall.
This is the second time in the past 3 years however that they have done this.
The standard mileage rate was increased by 4.5 cents for business, medical and moving travel for the last six months of 2011. Charitable travel remained unchanged at 14 cents per mile as this rate is set by statue, not the IRS.
The standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Mileage Rates for July 1, 2011 to December 31, 2011 are:
- Business: 55.5 cents per mile (Compared to first six months at 51 cents per mile).
- Medical: 23.5 cents per mile (Compared to first six months of 2011 at 19 cents per mile).
- Moving: 23.5 cents per mile (Compared to first six months of 2011 at 19 cents per mile).
- Charitable: Unchanged at 14 cents per mile.
Last-Minute Tax Deductions for 2011
With tax day just around the corner, here are some ideas that can maximize your tax returns this year:
Invest more money in your retirement account – Your retirement funds actually aren’t taxed until that money is taken out of your retirement account. Contributions to retirement funds can be made as late as April 15th, and the taxable limits for 2011 are $5,000 for an IRA (this does not include catch-up contributions for those 50+) and $16,500 for a 401(k). Not only will you be saving money on your taxes this year, but you’ll be bolstering your retirement fund for the future.
Make charitable donations – Although you can only deduct donations given in the taxable year of 2010, now is the time to pull out those receipts and bank statements. If you haven’t been keeping track of the charitable donations you make in a year, remember to keep your receipts next time, or ask for Tax ID numbers. Not only do monetary charitable donations count: old clothes, books, furniture, appliances, and other odds given to charitable organizations qualify as deductions, too – to the benefit of your community! If you have any property that has appreciated in value from the point you bought it, donating it can let you deduct more than you originally paid. Using a simple tax calculator online can give you an estimation of the impact your donations have on your overall tax refund.
Consider a Roth account – While you don’t get a tax break when you put money into a Roth, the money you invest gets to grow tax-free as long as the account is open. Regardless of rising tax rates in the future, you have a haven to place your money where it can still accumulate growth.
Write off the interest on your student loans – That’s right. If you have qualified loans out for the purpose of pursuing higher education, you can get up to $2,500 in deductions towards paying off the interest on your loans. This type of deduction is not an itemized deduction, but it is used to calculate your AGI.
Casualty and Theft Loss – If you and your family were the victims of a natural disaster, theft, or even a car accident, it’s possible to get up to $100 back per occurrence as long as they are not covered by your insurance. A few examples include the loss of a bank account due to the fault of your bank; fire, flood and storm damage, including hurricanes and tornadoes, and even the replacement cost of trees and shrubs damaged in fires or storms.
There are numerous options to help you optimize your tax returns this year. Make sure you are getting back money wherever you qualify for it, and be mindful of the smartest ways to invest your money for the future.
Olivia Mungal is an award-winning writer with pieces of her work archived in the Library of Congress. With a background in Law, she tackles convoluted economic issues in entertaining and engaging ways.
Couple Money’s 2011 Financial Freedom Giveaway
Hey, I have a link to the Couple Money’s blog over on the right, been there for a while.
Anyway They are having a great give away, Want to win? You have a few things you have to do, To find out go to 2011 Financial Freedom Giveaway, read the post, in it you will find out what to do and how you can w
in.
Just to incise you a bit more:
HP Mini Ice Berry Netbook*
2011 Quicken Premier
Subscription to Money Magazine (U.S. Residents only)
Subscription to Kiplinger’s Magazine (U.S. Residents only)
$25 Amazon gift card via Budgeting in the Fun Stuff
$25 Cash Prize via PayPal via Maximizing Money
The contest ends Thursday, March 31, 2011; no entries will be accepted afterwords. I’ll be drawing the winners on Friday April 1, 2011, so hurry.
I’d really enjoy the netbook. I have plans for one but can’t fit it into the budget just yet so this would be great.
Missouri not mailing Form 1099-G
The Missouri DOR is not mailing Form 1099-G.
Missouri is now providing 1099-G information online over a secure server that is available anytime.
Form 1099-G reports the amount of refunds, credits and other offsets of state income tax during the previous year that must be reported on your federal income tax return if you itemized your deductions last year.
If you are expecting one you can go to https://sa.dor.mo.gov/tax/1099g/ Fill out the following information:
Hit continue and it will give you your information. If you want to print this our for your tax return specialist there is an option for that.
Clients of mine, please do this.
If you prefer to use the telephone to obtain your 1099-G information, you may call (573) 526-8299. The same information required above is also required for the telephone inquiry system.
What is Form 1099-G?
Form 1099-G provide tax information that must be reported on your Federal Income Tax Return. It reports the amount of refunds, credits, and offsets of state income tax during the previous year. Depending this information maybe taxable on your Federal return if you claimed the amount as an itemized deduction last year. Click here for more information and answers to Frequently Asked Questions.
Those Affected by Late Tax Breaks
The start of the 2011 filing season will begin in January for the majority of taxpayers. However, the last and late changes in the law mean that the IRS will need to reprogram its processing systems for three provisions that were extended in the Tax Relief, Unemployment Insurance Re-authorization and Job Creation Act of 2010 that became law on Dec. 17. 2010.
People claiming any of these three items – involving the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction as well as those taxpayers who itemize deductions on Form 1040 Schedule A — will need to wait to file their tax returns until tax processing systems are ready, which the IRS estimates will be in mid- to late February.
“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” said IRS Commissioner Doug Shulman. “We will do everything we can to minimize the impact of recent tax law changes on other taxpayers. The IRS has worked through the holidays and into the New Year to get our systems reprogrammed and ensure taxpayers have a smooth tax season.”
The IRS will announce a specific date in the near future when it can start processing tax returns impacted by the late tax law changes. In the interim, people in the affected categories can start working on their tax returns, but they should not submit their returns until IRS systems are ready to process the new tax law changes.
The IRS urged taxpayers to use e-file instead of paper tax forms to minimize confusion over the recent tax changes and ensure accurate tax returns.
Taxpayers will need to wait to file if they are within any of the following three categories:
- Taxpayers claiming itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses as well as state and local taxes (add link to Schedule A). In addition, itemized deductions include the state and local general sales tax deduction extended in the Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010 enacted Dec. 17, which primarily benefits people living in areas without state and local income taxes and is claimed on Schedule A, Line 5. Because of late Congressional action to enact tax law changes, anyone who itemizes and files a Schedule A will need to wait to file until mid- to late February.
- Taxpayers claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students – covering up to $4,000 of tuition and fees paid to a post-secondary institution – is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit.
- Taxpayers claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.
For those falling into any of above three categories, the delay affects both paper filers and electronic filers.
The IRS emphasized that e-file is the fastest, best way for those affected by the delay to get their refunds. Those who use tax-preparation software can easily download updates from their software provider. The IRS Free File program also will be updated.
As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure a smooth tax season.
Updated information will be posted on IRS.gov. This will include an updated copy of Schedule A as well as updated state and local sales tax tables. Several other forms used by relatively few taxpayers are also affected by the recent changes, and more details are available on IRS.gov.
In addition, the IRS reminds employers about the new withholding tables released Friday for 2011. Employers should implement the 2011 withholding tables as soon as possible, but not later than Jan. 31, 2011. The IRS also reminds employers that Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov before year’s end.
An Interview with The Wondering Tax Pro
My first blog post appeared on August 6th, 2008. I credit Robert Flach of The Wondering Tax Pro with mentoring me into the blogging world.Robert has been preparing individual and business tax returns for people from all walks of life, from professional football players and actors to doctors and architects to secretaries and clerks since February of 1972.
I consider it a great honor to have Robert as a friend and a colleague. Below is an interview I conducted with Robert last month. At the Conclusion of the interview Robert had been notified of his being Named as the NATP Preparer of the month for January.
I hope you enjoy it as much as I did.
The Wondering Tax Pro, An Interview
Bruce:
Writing about taxes and finance isn’t the easiest thing for anyone to decide to do. You write/have one of the most popular blogs on the net entertaining this subject. What took you there? To clarify, why do you write about tax issues? What drives you to blog on the inner workings of our tax system?
Robert:
“They” say to “write what you know”. I write about taxes because it is what I know.
I have been writing for as long as I can remember – beginning as a child. And I have been writing about taxes for almost as long as I have been preparing taxes. I tried several times, unsuccessfully, to start a monthly newsletter called “The Ten Forty Letter” and to write a newspaper column on taxes.
I learned about “blogging” at a seminar at the 2001 NATP annual conference in New Orleans. Prior to that I had never seen or heard of a “blog”. The first post of THE WANDERING TAX PRO appeared on July 22, 2001.
If I may quote from an article on blogging that I wrote for the NATP quarterly TAXPRO Journal –
“I had decided to write a blog to provide year-round advice and information to my existing clients and to promote my tax preparation and accounting services. . . Currently I don’t solicit or accept any new 1040 clients, nor do I accept any corporate or partnership clients. But I continue to blog to provide a source of updated federal and state tax information for my 1040 clients, to attempt to market my various special reports and newsletters, to provide easily accessible samples of my writing for potential publishers, and, quite frankly, because I just enjoy it.”
Through the blog I have received national exposure and developed a nationwide reputation. It was because of my blog that I got the gig to write on taxes (daily during the tax season) at MainStreet.com.
I also enjoy the feeling of camaraderie between most fellow tax-bloggers.
Bruce:
Your Blog is fantastic in my eyes. The article you wrote on blogging for the NATP TAXPRO Journal is what I call my first exposure/introduction to the blogging scene. So thank you for that.
I am curious; you mentioned national exposure and a nationwide reputation, you’re not looking to strengthen your client base, so is it fame that you seek, or is it more the knowing that you are helping those with tax interest on a national level?
Robert:
There is some aspect of fame involved I suppose – everyone wants recognition within their chosen field. But the national exposure/reputation is more helpful in getting writing gigs and soliciting publishers.
Also, I love it when CPAs from across the country email me, a college drop-out, for tax advice! Not that I give it. . .
Bruce:
Drop out? Wow, what caused you to leave college? Where did you go?, How long where you there?, what your major?
Robert:
My mistake was that I was a Business Management major and not an Accounting major. I found that I got a better education at 59 Sip Avenue (the storefront tax office where I started) during the tax season, and had gotten a better education at an inner city high school, then at an inner city Jesuit college. This was the early 1970s. I went for 3 years. I eventually got my basic and graduate degree based on applying the 3 years of college credit and life/work experience.
Bruce:
Why do you like this field?
Robert:
I find taxes fascinating and fun.
Image via Wikipedia
I learned how to prepare taxes via on-the-job training while working in a storefront (although not a franchise operation) tax office in an urban business and transportation hub, dealing with the “great unwashed masses”. There was never a dull moment.
My mentor worked 12 hours a day, 7 days a week for 2½ months out of the year – and very casually the rest of the year. I liked that schedule and wanted to do the same.
To paraphrase a TV character from the 80s – “I love it when a tax return comes together”.
I obviously like writing.
Bruce:
OJT. Seems rather a sink or swim situation. I mean, just in the field seems like you had a lot to absorb the first few years just to get the basics. There was no formal upper ended training? Do you hold any degrees?
Robert:
Your “sink or swim” comment is appropriate to my OJT. On my first day of work my mentor gave me a client’s prior year 1040 and a briefcase full of the current year’s “stuff” and told me to, “Jump in and swim!”.
I feel I learned how to prepare 1040s the best way possible – by actually preparing 1040s. If I had a question while in the process of a return I would either look it up in his CCH books or ask my mentor, who would take the time to explain it to me, often referring me to other client return copies as examples. I learned the basics rather quickly, and worked on more involved returns as I returned each year.
I did not take a tax course in college. I did, in the mid-70s, take and pass the National Tax Training School correspondence course, so as to have some kind of “diploma”. My degrees are based on life and work experience, so my OJT tax training provided my degree and it was not my degree studies that provided my tax training.
And obviously I have attended many annual CPE offerings over the past 39 years.
Bruce:
I was raised on the philosophy of the school of hard knocks so I can relate to that aspect, as it much describes a vast amount of my own training. In the 70’s you took and passed the National Tax Training School correspondence course; what was your score? And how do you think you might fare if you took that same test now?
Robert:
I have no idea of my score – it was over 30 years ago. All that I saved was the actual diploma. I do not know if they are still in existence – I expect I would ace the test today.
Bruce:
What are your weaknesses/strengths as a writer?
Robert:
They say that brevity is the soul of wit. I need to learn to be more “economic” in my writing. It was a good learning experience having to confine my items for MainStreet.com to 200, 250, or a specific number of words. It was good practice trying to fit what I wanted to say into a limited space.
Bruce:
In your own words can you describe today’s financial market?
Robert:
I do not pretend to have much knowledge or experience in investments. I specifically tell my clients that I do not offer financial or investment advice – the most I can do is explain the tax consequences of financial or investment choices they may be faced with.
My mentor would always paraphrase the popular quote – “Bulls make money, bears make money, but hogs always lose” (or is it “pigs get slaughtered”?). It seems that we are currently faced with the consequence of the actions of a lot of hogs – and even those of us who were not greedy are affected.
Bruce:
It’s “Bulls make money, bears make money, pigs get slaughtered.”, or so I was always told and read. So, even though you offer the explanation of the tax consequences a taxpayer might be faced with, you do not really follow what happens there? Why not?
Robert:
A wise old broad (my boss at the Summit YWCA in the mid 70′s) once told me that “only Sherwin Williams can cover the earth”. It takes enough time to follow the changes in the Tax Code that I do not have the time, or inclination, to follow the market as well.
While a lot of investment/financial decisions involve common sense, a commodity often lacking today, one main reason I do not provide investment/financial advice to clients, solicited or otherwise, is so they cannot complain to me when the market crashes or if I tell them to buy a stock that goes down.
Bruce:
In your own opinion, what is your biggest flaw?
Robert:
Professionally I suppose I think of my clients too much as friends and therefore charge less than I should. While ambitious I am also a bit lazy, and tend to procrastinate too much. There is always “mañana”.
Bruce:
As a writer what is your current goal?
Robert:
To get more paying gigs as a freelance writer on tax planning and preparation topics. To have a book or two on taxes published. To write a mystery novel with a tax pro as detective (Death and Taxes would be a great title, if not already taken).
Bruce:
Okay now – can you share your goal in life?
Robert:
To live as long as my father – healthy and financially independent. In my younger days I would have said to produce a musical on Broadway. As my mentor would say – to die with no debts and just enough in my pocket to pay for the funeral and burial (though I will probably request to be cremated).
Bruce:
What was a major obstacle you have faced as a tax and personal finance writer?
Robert:
I guess finding gigs as a paid writer – at a reasonable and professional rate of compensation.
Bruce:
What was a major life obstacle you have faced?
Robert:
I do not believe I have had to face any obstacles in life – I had no special “handicaps”, other than possible occasional poor judgment (as we all have), to overcome.
Regrets
I’ve had a few. But then again, too few to mention. I do not regret not legally marrying. Looking back I only have two real regrets in life. The first is that I did not take my piano lessons seriously as a child. I would love to have been a white Bobby Short – playing APS in bars and clubs (although I probably would also need a singing voice). And the other involves a missed opportunity with a one-legged client (don’t ask).
Bruce:
Okay, I’ll leave the missed opportunity for another time. Can you tell us of a professional disappointment that still gives you pause?
Robert:
To be honest there is none that I can think of as I write this response.
Bruce:
That is fantastic. There isn’t a return or situation professionally that when it comes around again, you don’t hesitate or pause with the proverbial ummmm… ?
Robert:
Things that make you go “ummm”? If a return or professional situation was disappointing or problematic I simply do not repeat it. Any specific professional regrets usually involve procrastination, which I need to overcome.
Bruce:
Where do you see yourself in 5 years?
Robert:
Hopefully still preparing 1040s (if I last 11 more seasons – including the upcoming one – I can say I have been preparing 1040s for 50 tax seasons!) but with a thinned “herd”.
Also hopefully earning more money as a paid freelance writer. And, probably living in Pike or Wayne County, Pennsylvania.
Bruce:
50 Tax seasons, that seems to be a life time. Pike or Wayne County, PA. Why one of those places? Something special there?
Robert:
These two counties are next to each other and, for me, interchangeable. I specifically refer to Honesdale, Beach Lake (Wayne) and Hawley/Lake Wallenpaupack (Pike). My mother grew up “over the bridge” in Lake Huntington NY (Sullivan County) and my family and I have been going to this area in the summer just about every year since I was a wee lad. I am familiar with the area, and it certainly has a much cheaper cost of living than New Jersey. I like the 4 seasons, so I would certainly not go south.
My only regret in moving would be that I would no longer be an hour from Times Square (re Broadway and off-Broadway theatre) via bus – but it is only a little over 100 miles away.
I have done PA returns occasionally over the years, and it is similar to the NJ-1040 in that it is also a “gross” income tax. I would have no problem picking up PA clients, if needed. And about 2/3 of my clients already mail their returns to me as it is – with several more just dropping off. I rarely do “sit down” appointments where I prepare the return “as you wait” anymore.
Bruce:
Moving that far could put a damper on the Wandering part, is that what you are saying? Do you see yourself moving after you retire?
Robert:
My mind will still wander, I will continue to wander around on the internet, and I will continue to travel. My first plan was to move to the Jersey shore area (Monmouth County) right away, and then to PA in 3 or 4 years – but I may bypass the shore and go directly to PA within a year or two. I will remain in PA after I have reached the 50 tax season mark, unless I find I do not like it (in which case I would move to Jersey shore area).
Bruce:
I ask this because I have heard you can tell more by this. What was the last book you read?
Robert:
“The 5th Horseman” by James Patterson and Maxine Paetro. I only read murder mysteries – those with clergy as detectives, with cats involved (speaking and non-speaking), written by Ed McBain (Evan Hunter), Margaret Truman and JJ Jance, later entries in the Donald Bain “Murder She Wrote” series, and I liked Al Roker’s first entry.
Bruce:
Is there any one you would like me to interview next?
Robert:
Anyone in our “circle” would do – Joe, Russ, Kelly, Trish, Kay, Monica, Stacie, etc. You choose.
Bruce:
Very cool. Thank you very much Robert.
You can find more from Robert:
http://wanderingtaxpro.blogspot.com
http://njtaxpractice.blogspot.com
http://www.mainstreet.com/category/authors/robert-d-flach-0
Related articles
- IRS Releases Specifications for Registered Tax Return Preparer Test – Doesn’t it just give you the chills? (staciesmoretaxtips.wordpress.com)
- Summer time is tax pro time (dontmesswithtaxes.typepad.com)
A Certified Public Accountant has been suspended by the IRS
OMG could it be so? What is the world coming to, someone with the backing of the IRS, with all the testing needed to “count beans” has been suspended from practice before the IRS. Humm, does this mean they are not sure non-CPA tax return prepares are faulty and they are the only ones doing things a bit shady? Is it going to come out that those with presumed earned credentials are the ones who might be the shadiest?
Naw this was just an isolated incident. We won’t need to subject them to regular testing and IRS guided CPE.
Right?
Or maybe, given as more of these stories come out, maybe, they should be first.
Yes, I think that would be a good plan.
IRS Suspends Tax Practitioner for Preparing False Tax Returns
WASHINGTON — A Certified Public Accountant has been suspended for twelve months from practice before the Internal Revenue Service by the Office of Professional Responsibility for providing false or misleading information in connection with the preparation of his clients’ tax returns.
“Practitioners have a duty both to their clients and to the system to insure taxpayers are complying with tax laws and filing complete and accurate tax returns,” Karen L. Hawkins, Director of the Office of Professional Responsibility said. Robert A. Loeser, a certified public accountant from Houston, Texas, assisted his clients to lower their tax bills by claiming false business expenses on tax returns he prepared.
For no legitimate business purpose, Loeser’s clients were advised to forward funds from their businesses to two corporations Loeser controlled. The corporations then rebated the funds to his clients. Loeser prepared the clients’ books and business tax returns expensing and deducting the entire amounts that were paid to the corporations. The IRS alleged Loeser violated Circular 230 by giving false or misleading information to the Department of Treasury and the IRS.
The settlement agreement included a disclosure authorization that allowed the Office of Professional Responsibility to issue this release.
The Office of Professional Responsibility (OPR) establishes and enforces standards of competence, integrity and conduct for tax professionals — enrolled agents, attorneys, CPAs, and other individuals and groups covered by Treasury Circular 230.
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