A couple of years ago, writing about taxes was fun. There were deductions and exclusions, and the IRS was helpful and forgiving. No more Mr. Nice Guy. The recent investigation of the IRS by Congress seems to have swayed the IRS into punitive action. If they are getting called on the carpet for not following the exact wording of the law, then they will enforce the exact wording.

Taxpayers should therefore be aware that they need documentation like never before, and be very careful in tax preparation; do not expect compassion. For example, one of the recent court cases involved … Read the rest

Notes on Auto and Medical Expenses, and Foreign Income

The depreciation on new cars purchased in 2013 has been announced as:

The 2013 mileage allowance for business use is 56.5 cents per mile in lieu of depreciation, insurance, gas, tires, licenses and all repairs, and those using it must never have taken actual expenses on that auto in prior years.The above includes a “bonus” depreciation of $8,000 in the first year which is not available for “pre-owned” cars. … Read the rest

Well, we all know that the IRS seldom gives us treats. As usual, it’s a treatment. They felt that certain expense items needed clarification with regard to who is responsible for picking up the tab on the 50 percent of meals and entertainment that is not deductible. But this rule, it seems to me, is equally applicable to autos and other expenses incurred by individuals who represent a company that is responsible for reimbursing them. The problem the IRS addressed pertains to an employee or independent representative who pays for a business meal or for entertainment. He or she then … Read the rest

One of the truly amazing things about the Health Reform Act is that new requirements will keep coming for about the next six years. Some are so onerous that we should all hope that they are changed before they are implemented. Companies with more than 50 employees should start now to become acquainted with some of the information filing requirements that will be implemented in 2014. We concern ourselves here with income tax laws already in effect for 2013.

The first concern is an excise tax of 2.3 percent on the sale of medical equipment to medical facilities or doctor’s … Read the rest

The Supreme Court has now ruled that the increases in the Health Care Law are tax increases. As we approach 2013, and the beginning of the Health Care Law, we need to face the effects of the eye-opening changes in taxes generated by this law.

Let’s consider what some of those effects are:

•   In 2013, employers must start reporting the cost of each employee’s medical insurance on their W-2. Companies must gear up their record keeping.

•   In 2013, a new tax of 0.9% on earnings in excess of limits. The limits for all of the income tax … Read the rest

The IRS has recently announced that the mileage rate for automobiles has been increased from 51 cents per mile to 55.5 cents per mile for the six months that began July 1, 2011, and ends December 31, 2011.  This rule applies to those taxpayers who use the business mileage allowance instead of the actual costs of operating a business auto.  These costs include depreciation, gasoline, insurance and all repairs and maintenance.  The only allowed additional costs to mileage are tolls and parking.  The increase seems reasonable.  Assuming that gas has increased in price about 60 cents per gallon, if … Read the rest