While Congress and the President are negotiating a solution to avoid the nation plunging over the fiscal cliff issues, the IRS has been busy.
The Head of the IRS Doug Shulman stepped down on November 11th, and the IRS is bracing for last minute legislation that could delay the tax filing season for some tax payers.
During this time of year, the IRS always releases the mileage rate change and it is going up.....which is good for you!
So How Much Did the Rate Go Up?
The IRS announced last week that beginning on January 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56.5 cents per mile for business miles driven
- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
So What Does this Mean for the Small Business Person?
Most businesses reimburse their employees business mileage at the IRS approved rate. When doing so, the business can deduct the amount reimbursed as auto expense and the employee does not have to declare the reimbursement as income. That is a win for both the employee and the business.
Also, many business owners use the mileage rate to reimburse themselves for their business mileage. I put 20,000 miles a year on my car and most of the miles are business. So I love the mileage reimbursement because it reimburses me more than actual cost does.
How is the Mileage Rate Calculated?
The mileage rate for charitable work is set by statute. The rates used in 2013 for business, medical and moving purposes are based on a study conducted by Runzheimer International, under contract with the IRS. "Higher maintenance costs and fuel prices are the primary reasons for the increase in the national optional business deduction," said Ted Schuerman, Senior Project Leader, Runzheimer International. "The data Runzheimer collects for the IRS highlights the shifts in market conditions nationwide and enable the IRS and other organizations to make more informed business decisions related to vehicle costs."
On Thanksgiving Day, 11 of my family members met in downtown Beaumont to run in the annual Turkey Trot. Your CPA finished the 5k race with a time of 26:39.9, the slowest I have ever run a 5k race in my life. When I was in my early 20's, I could run a 5k in 17 minutes and a 10k in under 36 minutes. So father time has caught up with me, plus I don't run nearly as much as I use to run.
As in everything in life, we pass the torch on to the younger generation eventually. My son, who has never run this far before, did the "Couch to 5k" training program and passed me in the first mile like I was standing still. I didn't see him again until the finish line. My 12 year old nephew ran strategically behind me for the first 2 ½ miles then blew me away at the finish. But I did muster up the kick at the finish line to pass a man I thought was in worse physical shape than myself.
Last Friday, we moved from our old building to a newer building. We say goodbye to our office of 5 years. I am going to miss the golf course view and the occasional golfer falling into the pond while trying to retrieve his ball from the water. I will not miss the golfers who have had to much to drink that decide to relieve themselves with the thought "I can't see into their building windows so they can't see me".
Our new offices are designed for us to stay ahead of our competition in how we serve you. Of course, with our technology, we are light years ahead of other small business CPA firms, but we need to do better. Our new office gives us bigger areas for meeting with clients, better building access, and most importantly the space we need so we can continue to work efficiently at saving your business money and helping your business grow!