Posts Tagged ‘tax law’
Monday, May 16th, 2011
The IRS has spoken. It has has no current plans to increase the standard mileage rate of 51¢ per mile for business miles driven, despite the big boost in gasoline prices.
Simplified deduction method. The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 51¢ per mile for business travel after 2010. (The 2011 rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 19¢ per mile, 2.5¢ more per mile than the 16.5¢ for 2010.) ( Rev Proc 2010-51, 2010-51 IRB 883 )
The mileage allowance deduction replaces separate deductions for lease payments (or depreciation if the car is purchased), maintenance, repairs, tires, gas, oil, insurance, and license and registration fees. The taxpayer may, however, still claim separate deductions for parking fees and tolls connected to business driving. ( Rev Proc 2010-51 )
The standard mileage rate may not be used for a purchased auto if: it was previously depreciated using a method other than straight-line for its estimated useful life; a Code Sec. 179 expensing deduction was claimed for the auto; the taxpayer has claimed the additional first-year depreciation allowance; or the taxpayer depreciated it using MACRS under Code Sec. 168.
A taxpayer who uses the mileage allowance method for an auto he owns may switch in a later year to deducting the business connected portion of actual expenses, so long as he depreciates it from that point on using straight-line depreciation over the auto’s remaining life. The depreciation deductions would still be subject to the Code Sec. 280F dollar caps. ( Rev Proc 2010-51 )
Additionally, employers may reimburse employees who are required to provide their own cars for business use at a rate that doesn’t exceed the standard mileage rate. A mileage rate that doesn’t exceed the standard mileage rate is treated as made under an accountable plan if the mileage is properly substantiated (time, place, mileage, and business purpose).
I handle IRS problems for my clients. If you get a letter from the IRS, and you are worried or have questions, send me an e-mail or, if urgent, call me.
Lowrance Law LLC
Friday, April 15th, 2011
The IRS issued a press release advising taxpayers of payment options when you file your income tax return. The release is IR 2011-42. I have placed it in the blog below. The most important thing for you to know is if you owe taxes but you cannot pay the full amount file your tax return and make a payment. Fill out and attach to your return Form 9465 — Installment Agreement Request. The IRS will contact you to work out a payment plan. Read the information below.
Remember, I am a tax attorney having worked in Office of Chief Counsel, IRS. If you have questions or need help with the IRS, just let me know.
Lowrance Law LLC
IRS reminds taxpayers with a balance due that there are several payment options available [IR 2011-42]: Taxpayers who have a balance due when they file their 2010 federal individual income tax returns have several payment options.
Payments can be made by electronic funds withdrawal, credit or debit card, the Electronic Federal Tax Payment System, or check or money order. According to IRS, some taxpayers who itemize their deductions may be eligible to claim as a miscellaneous itemized deduction the convenience fee charged to pay individual income taxes by credit or debit card.
Along with a check or money order, a taxpayer must include Form 1040-V, Payment Voucher. If a return has already been submitted but additional payment is due, a check or money order should be mailed to IRS with Form 1040-V. “For members of the military and others serving in combat zones, the filing and payment deadline is normally postponed until at least 180 days after the service member leaves the combat zone,” IRS said. “If you are eligible, you get the extra time without having to ask for it,” IRS added.
The agency advises taxpayers with a balance due to pay as much as possible by April 18 to avoid penalties and interest. Those who cannot pay in full have several options to consider. The first is an installment agreement. In most cases, this can be done in several minutes by using the IRS website, the agency said. The second payment option is an Offer in Compromise, which is an agreement between a taxpayer and IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. It is subject to acceptance based on legal requirements. The news release can be viewed on the IRS website.
Monday, January 5th, 2009
IRS has published the Form 1040 that individuals file for their 2008 tax returns. Yes, it is time to think about filing your 2008 individual income tax return. The normal due date is April 15, 2009. There a some new changes this year. IRS publishes the new Form 1040, along with instructions, every year. The instructions are, believe it or not, organized and easy to read.
Many people are talking about the economic stimulus payment, recovery rebate credit and withdrawal of your stimulus payment from a tax favored account, see my favorite tax blogger Taxgirl. You should read the IRS 1040 instructions, page 6, for some plain talk explanations. Click Here
Any stimulus payment you received is not taxable for federal income tax purposes, but it may reduce your recovery rebate credit. What? The recovery rebate credit, you ask. The credit is available if, for some reason, you did not receive a stimulus payment in 2008 and meet other requirements. In the instructions there is a full explanation and a somewhat workable “worksheet.” Also, see Recovery Rebate Credit Here
Other new items:
First time home buyer: If you bought a home after April 8, 2008, and before July 1, 2009, and did not own a main home during the prior 3 years, you may be able to take the “first time home buyer credit.” The single largest provision in the $15.1 billion package of housing tax incentives in the recently enacted Housing Assistance Tax Act of 2008 (the “Housing Act”) is a measure allowing individuals buying their first home to take a tax credit of up to $7,500 of the purchase price. Qualified home buyers can subtract the credit amount from their federal income tax when they buy a home and even get a refund if the credit exceeds the tax. However, they are then required to pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government.
The IRS standard mileage rate for business use of your vehicle in 2008 is 50.5 cents per business mile driven through June and 58.5 cents per business mile thereafter. The standard mileage rate for 2009 is 55 cents. You will need to allocate your automobile expenses between business and personal use based on miles driven during the year. Proper recordkeeping is crucial in the event of an IRS challenge.
If you received an economic stimulus payment last year that was directly deposited to a tax favored account and you withdrew the payment by the due date of your return (including extensions), the amount withdrawn will not be taxed. Good news, eh?
Of course, I must tell you that all of the above information is general in nature. It is not meant to tax advice or a legal opinion. Always consult a tax professional before thinking that information here is a “slam dunk” for tax advice.
Monday, October 6th, 2008
Lowrance Law LLC is a private law firm in McLean, VA, specializing in tax problems. I represent people having tax problems with the IRS. I focus on tax controversy matters (civil and criminal tax matters), and tax disputes for small businesses, individuals and other attorneys.
Today is the first posting to the Lowrance Law Firm’s Blog. In fact, the Lowrance Law website, Lowrance Law LLC, is online today. The purpose of this Blog is to discuss tax controversy issues, news about taxes, the Internal Revenue Service and the tax code. I will write about these subjects in ordinary, non-technical and understandable language. Discussing taxes can be very dry and technical, but I hope to add new insight to various tax issues.
For example, how do you feel when you receive a letter from the IRS? You probably feel queasy, nervous and dread opening the envelope. When you receive that letter you are involved in a tax controversy whether you realize it or not. The IRS will tell you they are examining your tax return regarding certain matters. They will ask you to provide more information, and they may invite you to come into the office to explain your tax return. Sometimes this starts a long road to solving your tax problems. Your particular tax problem may be “no changed” by the examining agent. If so, you are lucky. That means the IRS accepts your return as filed. If the IRS disallows your deduction or adds more income to your return, you may start on various appeals within the IRS perhaps leading to litigation.
In future posts, I will discuss the many ways of dealing with the IRS or the state taxing authorities. I will explain about IRS collection procedures, appeal procedures, how to deal with the Revenue Agents and how to find someone to represent you if needed.
You can read about the details of my experience as a tax attorney with the Office of Chief Counsel, IRS, on my website, Lowrance Law LLC. I worked with and advised IRS agents in many types of cases. I litigated many tax cases in the United States Tax Court, and I assisted the US Department of Justice in tax cases. My tax attorney experience combined with my litigation and investigative experience (former Special Agent, FBI) provides me with unique skills to deal with tax controversy matters.
This Blog will evolve over time with research links, links to other tax blogs and discussions that will help you understand how to deal with the IRS and other tax authorities.
Contact me with any questions.