Travis T. Raml, CPA Blog

IR-2008-131, Nov. 24, 2008

WASHINGTON — The Internal Revenue Service today issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

*
55 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

The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2008-72 contains additional information on these standard mileage rates.

http://www.irs.gov/newsroom/article/0,,id=200505,00.html

On October 3, 2008, Congress passed and President Bush signed H.R. 1424, Emergency Economic Stabilization, Energy Improvement and Extension, and Tax Extenders and AMT Relief Acts of 2008, into law.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said that Congress has “done its job” as the House of Representatives approved the Emergency Economic Stabilization Act of 2008 – a financial rescue plan that will allow the U.S. Treasury to purchase bad assets threatening the solvency of American financial institutions.

The following is a summary of the tax provisions of the law.

Tax Relief Promoting Jobs, Energy, Families

The financial rescue plan contains the entire text of H.R. 6049 as amended by the Senate on September 23 – including

* Clean energy tax incentives,
* Alternative minimum tax relief,
* Extensions of expiring business and family tax cuts,
* Disaster relief,
* Mental health parity, and
* Other provisions.

The Senate amended H.R. 6049 with two measures – one containing energy tax incentives and the other containing all remaining provisions. The combined cost for all measures – energy, AMT, “extenders,” and other provisions – is approximately $150 billion, and the offsets in the package total approximately $43.5 billion. Energy provisions are completely offset, and “extenders” and other provisions are partially offset. Of the total cost, $64.1 billion is unoffset AMT relief. Both the House and Senate have previously passed unoffset AMT relief this year.

Help for Homeowners Sinking Under Mortgage Debt

Usually, when homeowners have parts of their mortgages forgiven, they immediately owe income taxes on the amount of indebtedness forgiven. To keep struggling homeowners from facing higher tax bills, the housing relief bill passed by Congress this year allowed homeowners caught up in the mortgage crisis to avoid paying tax on forgiven mortgage debts through 2009. To help more homeowners stay on their financial feet in the ongoing economic crisis, the rescue plan will extend through 2012 the housing bill provision that forgives income from the cancellation of indebtedness. It does not extend the relief to home equity loans.

The package of tax relief added to the overall bill also includes an extension of the Baucus authored standard property tax deduction for American homeowners who do not itemize on their Federal taxes. An estimated 71.8 million American homeowners who pay property taxes to their State and local governments, but only 43.5 million receive a Federal tax deduction for those taxes – those who itemize on their annual returns. The “Non-Itemizer Real Property Tax Deduction” provides a standard deduction – $500 for single filers and $1,000 for joint filers – to reach 28.3 million American homeowners who deserve property tax relief.

Stronger Taxation of Compensation and Severance Pay for Financial Executives

The financial rescue plan contains non-tax measures aimed at limiting executive compensation and “golden parachute” severance packages overall for companies and executives participating in the buyout – a key element in gaining approval of the package among negotiators. When the Treasury directly buys assets from a company, not through an auction or bidding process, the financial institution will be required to meet certain standards for executive compensation, including a total prohibition on “golden parachute” severance payments to senior executive officers.

When more than $300 million of a company’s assets are purchased by the Treasury through an auction, “golden parachute” payments will be banned for top executives hired while the Treasury rescue is in effect and terminated for any reason, or in the case of bankruptcy, insolvency, or receivership of the financial institution. Additionally, tax provisions will kick in to strengthen the tax treatment of remaining executive compensation and severance packages. The deductibility of executive compensation for companies will be cut in half from the level in current law, and companies will also lose deductions currently available for excessively large severance packages. Executives receiving severance packages will continue to face a 20 percent excise tax on payments once they reach an excessive threshold, and that tax will now be due if the executive leaves for reasons other than a standard retirement for which they are eligible – not just if the company changes hands, as in current law.

Source: Senate Finance Committee

“This information originates from http://www.taxalmanac.org and is licensed subject to the terms posted at http://www.taxalmanac.org. Intuit Inc. is not responsible for this information.”

WASHINGTON — The Internal Revenue Service is looking for taxpayers who are missing more than 279,000 economic stimulus checks totaling about $163 million and more than 104,000 regular refund checks totaling about $103 million that were returned by the U.S. Postal Service due to mailing address errors.

“People across the country are missing tax refunds and stimulus checks. We want to get this money into the hands of taxpayers where it belongs,” said IRS Commissioner Doug Shulman. “We are committed to making the process as easy as possible for taxpayers to update their addresses with the IRS and get their checks.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due.

Stimulus Checks

It is crucial that taxpayers who may be due a stimulus check update their addresses with the IRS by Nov. 28, 2008. By law, economic stimulus checks must be sent out by Dec. 31 of this year. The undeliverable economic stimulus checks average $583.

The “Where’s My Stimulus Payment?” tool on this Web site is the quickest and easiest way for a taxpayer to check the status of a stimulus check and receive instructions on how to update his or her address. Taxpayers without internet access should call 1-866-234-2942.

Regular Refunds

The regular refund checks that were returned to the IRS average $988. These checks are resent as soon as taxpayers update their address.

Taxpayers can update their addresses with the “Where’s My Refund?” tool on this Web site. It enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2007 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will be given instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

Unsure?

Taxpayers not sure of which type of check they may be due should check on a potential economic stimulus check first because of the looming deadline. See instructions above.

For Most People

The vast majority of checks mailed out by the IRS reach their rightful owner every year. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

Through September 2008, the government distributed 116 million economic stimulus payments with only about 279,000 checks being undeliverable. Meanwhile, the IRS has distributed more than 105 million regular refunds this year with only about 104,000 being undeliverable. In both cases, well under one percent of refunds or stimulus checks were undeliverable.

Avoiding Future Problems

The IRS encourages taxpayers to choose direct deposit when they file their return because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns.

The IRS also encourages taxpayers to file their tax returns electronically because e-file eliminates the risk of lost paper returns. E-file also reduces errors and speeds up refunds.

Information provided by the IRS
http://www.irs.gov/pub/irs-news/ir-08-123.pdf

If you’re a small business owner you’ve probably seen those QuickBooks commercials showing the pleased business owners effortlessly entering transactions into QuickBooks and with a few simple clicks everything is complete………..if only if it were that simple.

If you’re a small business owner that has gone done this route there is a good chance that you’ve found yourself saying what did I get myself into. Whether it’s excess transactions, to many bank accounts, unreadable financial statements, or any host of additional problems you’ve quickly discovered that it’s not just a simple click.

First thing I tell clients who find themselves in this situation is don’t feel bad. It really is NOT your fault. The advertisements make it sound simple, and you’re concerned with saving a buck these days………but the fact is maintaining your own books can quickly become an unmanageable task, especially if you’re running most of the day to day operation of your business.

So what can you do? If you are committed to doing the books yourself, than I would suggest that we setup the QuickBooks for you and help train you to be successful. Most of this can be accomplished in just a few hours. If you have a limited volume of transactions and feel you have the time to handle it, this is a great option. We can even do quarterly reviews for you just to make sure your not veering off course during the year. If you have a relatively high volume of transactions or you simply don’t have the time to handle it, then we can do it for you. We’ve designed our services with affordability in mind and can meet virtually any budget.

If you’re ready to end the nightmares then feel free to contact me (free of charge) and we can discuss your situation in more detail. I can reached at (443) 927-9161 (MD), (703) 637-9881 (DC & VA), or by email at travis@ttrcpa.com.

Thanks,
Travis T. Raml, CPA

A common request from some LLC owner(s) is to pay themselves a salary. Though it is possible it is unlikely this appropriate especially if the owner filed his or her own LLC filings. Single member LLC’s by default are treated as Sole-Proprietor (an ignored entity and with business income reported on schedule C of his or her personal tax return). Likewise multi-member LLC’s are by default treated as Partnerships (with business income reported on tax form 1065 with income and losses passed through to the partners).

In either case a salary is not permitted by the LLC owner(s). Instead the owner or partners can take distributions which can or can not have a bearing on their taxes. Regardless traditional paychecks and remittance of taxes through the organization is not appropriate.

So what can be done? In this case the LLC owner(s) have a couple options.

1) Continue to take distributions in liu of salary.
2) File form 8832 with the IRS to elect corporate tax status of the LLC with the IRS.

Under option (2) once the IRS has accepted the 8832 the LLC will be recognized as a corporation for tax purposes, and the owner(s) can generally begin to tax a salary.

However, special care should be taken before such decisions are made since election of corporate tax status can not generally be changed for 60 months after the effective date of the filing.

If this or other tax questions are concerning you please feel free to contact me (free of charge) and I will advise you of your available options. I can reached at (443) 927-9161 (MD), (703) 637-9881 (DC & VA), or by email at travis@ttrcpa.com.

Thanks,
Travis T. Raml, CPA

WASHINGTON — First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

Available for a limited time only, the credit:

Applies to home purchases after April 8, 2008, and before July 1, 2009.
Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.
However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the following questions and answers may help you determine whether you qualify for the credit.

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Only the purchase of a main home located in the United States qualifies and only for a limited time. Vacation homes and rental property are not eligible. You must buy the home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.

Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return.

Q. How much is the credit?

A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more. Whatever the size of the credit a taxpayer receives, the credit must be repaid over a 15-year period.

Q. Are there income limits?

A. Yes. The credit is reduced or eliminated for higher-income taxpayers.

The credit is phased out based on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.

This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a main home:

Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
You stop using your home as your main home.
You sell your home before the end of the year.
You are a nonresident alien.
You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.
Your home financing comes from tax-exempt mortgage revenue bonds.
You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.
Q. How and when is the credit repaid?

A. The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.

You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

However, some exceptions apply to the repayment rule. They include:

If you die, any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount.
If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions. Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.

Information provided by the IRS newswire service

With the ease and low expenses of forming an LLC, they are quickly becoming the entity of choice of many small business owners. However this type of entity can have some serious drawbacks if you simply form it without seeking some expert advice.

One of the more common mistakes I have been seeing is individuals forming LLCs and assuming they are corporations. In fact they are not taxed as corporations if formed by one individual and instead are treated as an ignored entity for tax purposes. Further the income they generate gets taxed on your personal tax return on Sch C and is subject to SE (Self-Employment) Tax. There are some circumstances where this does not apply, but generally if you run a business with the intention of generating a profit SE Tax applies.

So what is the big deal with SE Tax. Well this is the Social Security (6.2%) and Medicare (1.45%) (also known as FICA Taxes) that are normally deducted from your regular paycheck……..only doubled. You might ask why are they doubled. Well as a self-employed individual you are responsible for the employee and EMPLOYER (same as amount as the employee) share of FICA. No wait it gets worst. Unlike your regular income taxes, SE tax is not reduced by itemized deductions or tax credits.

So how is it calculated? You take your Sch C net income and multiply it by 92.35%. This is your net earnings from self-employment. Next multiply this amount by 15.3% and your have your SE Taxes due. The only real benefit is that you get to deduct 1/2 of the self employment taxes as a deduction on your 1040. But remember this simply reduces your taxable income, this is not a tax credit. You then add this tax with your regular income tax liability to arrive at your total tax liability. SE Tax in many cases can easily equal or exceed your regular income taxes, and if you do not plan correctly can lead to a huge tax headache at year end especially if you were expecting a refund.

So what can you do? My best advice is to contact me and for FREE I will tell you some of the options you have at your disposal. I can reached at (443) 927-9161 (MD), (703) 637-9881 (DC & VA), or by email at travis@ttrcpa.com.

WASHINGTON — Taxpayers and tax preparers affected in coming days by Hurricane Ike will have an extra seven days to file corporate tax returns and third-quarter estimated taxes otherwise due on Monday, Sept. 15, 2008, the Internal Revenue Service announced today.

Hurricane Ike is expected to make landfall on the Gulf Coast of Texas, not far from Houston, by early Saturday morning.

Because the storm is falling within one business day of the Sept. 15 due dates, taxpayers directly impacted by the storm will have until midnight Sept. 22 to meet their tax filing obligations without incurring late filing and payment penalties.

The IRS is likely to further postpone that deadline and make further tax relief available following damage assessments by the Federal Emergency Management Agency.

Affected taxpayers can mark paper tax returns with the words “Hurricane Ike.” Taxpayers who e-file their returns can use their software’s “disaster” feature, if available.

Taxpayers can keep up to date by visiting the IRS.gov Web site.

Information provided by the IRS newswire service

Are your workers independent contractors or employees? The answer can have a profound impact on how much tax you pay as a small business owner. Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay. It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.

Employers who misclassify workers as independent contractors can end up with substantial tax bills as well as penalties for failing to pay employment taxes and failing to file required tax forms. Workers can avoid higher tax bills and lost benefits if they know their proper status.

Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.

Generally, whether a worker is an employee or an independent contractor depends upon how much control you have as a business owner. If you have the right to control or direct not only what is to be done but also how it is to be done then your workers are most likely employees. If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.

Three broad characteristics are used by the IRS to determine the relationship between businesses and workers - Behavioral Control, Financial Control, and the Type of Relationship. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training, or other means. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

Knowing the proper worker classification can be critical to your business. Don’t guess. Act now to make certain you know for sure.

You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer’s Supplemental Tax Guide, and Publication 1779, Independent Contractor or Employee. Both of these publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Contractor vs. Employee
Publication 1779
Publication 15-A

In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.

Fortunately, you don’t have to keep all tax records around forever. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.

If you are in business, there is no particular method of bookkeeping you must use. However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.

Publication 552, Recordkeeping for Individuals, provides more detailed information on individual record keeping requirements.

Publication 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.

These publications can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Actually, there is a wealth of free tax information on the IRS Web site, IRS.gov. It’s not just about recordkeeping. Individuals and businesses can find answers to almost any question about federal taxes on the web site. Helpful links found at the top of the home page will take you directly to topics centered on Individuals, Businesses, Charities and Non-Profits, Government Entities, Tax Professionals, the Retirement Plan Community and Tax Exempt Bonds.

In addition to the latest news coming from the IRS, the homepage can lead you to statistics, news releases and tax tips, local IRS offices, the Taxpayer Advocate Service, and thousands of IRS forms and publications. Frequently asked questions and answers are available or you can use two separate search icons: one by keyword and one by answering “I need to . . .”

Why wait? Summertime is a great time to visit IRS.gov.

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

IRS Publication 552, Recordkeeping for Individuals (PDF)
IRS Publication 583, Starting a Business and Keeping Records (PDF)
IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses (PDF)

If you plan to run your small business out of your home you may be temped to “write-off” many of your household expenses. But how do you know what is deductible and what is not? The IRS has some advice that may help answer the question: “Can I take a Home Office Deduction?”

Generally, expenses related to the rent, purchase, maintenance and repair of a personal residence are not deductible.

However, if you use part of your home for business purposes you may be able to take a home office deduction. Expenses that can be deducted include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, painting, repairs and depreciation.

In order to claim a business deduction, you must use part of your home:

Exclusively and regularly as your principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of your business, or in connection with your trade or business where there is a separate structure not attached to the home; or
On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.
In addition, if you work as an employee you can claim this deduction only if the regular and exclusive business use of the home is for the convenience of your employer and the portion of the home is not rented by the employer.

“Exclusive use” means a specific area of the home is used only for trade or business. “Regular use” means the area is used regularly for trade or business. Incidental or occasional business use is not regular use.

Non-business profit-seeking endeavors such as investment activities do not qualify for a home office deduction, nor do not-for-profit activities such as hobbies.

Example: An attorney uses the den in his home to write legal briefs or prepare clients’ tax returns. The family also uses the den for recreation. The den is not used exclusively in the attorney’s profession, so a business deduction cannot be claimed for its use.

These requirements are discussed in greater detail in Publication 587, Business Use of Your Home available at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Link: Publication 587, Business Use of Your Home

WASHINGTON — Internal Revenue Service officials today announced a change in the extended due date on certain business returns to help individuals better meet their filing obligations. The change, which reduces the extension period from six to five months, eases the burden on taxpayers who must report information from Schedules K-1 and similar documents on their individual tax returns.

Income, deductions and credits from partnerships, S corporations, estates and trusts are reported to partners, investors and beneficiaries on Schedules K-1 and other similar statements. The recipients then use that information to complete their own tax returns.

Currently, the extended due date for both businesses and individuals often falls on the same date, generally Oct. 15. This creates a burden for individual taxpayers who rely on the information from Schedule K-1 and other similar statements to prepare and file their personal tax returns in a timely manner.

“We are eliminating the same-day deadline for these returns, which causes needless hardship and puts the individual taxpayer in an awkward position,” said IRS Commissioner Doug Shulman. “We want to correct this timing issue to ensure that all taxpayers have the information they need to file timely and stay in compliance with the law.”

The IRS today issued temporary and proposed regulations that will reduce the extension of time to file tax returns for certain businesses that generate Schedules K-1 and other similar statements from six months to five. Requiring these statements to be issued one month earlier, generally by Sept. 15, will provide recipients time to prepare and file returns within the extended time frames.

This change will be effective for extension requests with respect to tax returns due on or after Jan. 1, 2009, and applies to business entities that file the following returns and forms that have a tax year ending on or after Sept. 30, 2008:

1. Form 1065, U.S.Return of Partnership Income
2. Form 1041, U.S. Income Tax Return for Estates & Trusts
3. Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)

The regulation does not change the process for requesting an extension of time to file, nor does it affect extensions of time to file other types of business returns, such as those used by S corporations.

“The regulations will bring the extended time frames of certain business entities with flow-through items in line with other similar businesses, such as S corporations,” said Jodi Patterson, director of IRS’s Office of Taxpayer Burden Reduction. “S corporations have a return due date of March 15 and, under a regular 6-month extension of time to file, their extended due date already falls on September 15.”

The IRS initiated the proposal to reduce the extension of time to file, carefully weighing the impact on partnerships and other affected entities against the burden the existing deadline puts on individuals, who need this information to file timely and accurate returns.

Comments on the proposed regulations can be sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-115457-08). For further information on commenting on the proposed regulations, see REG-115457-08.

The IRS is committed to reducing unnecessary taxpayer burden and welcomes input from tax and payroll professionals, business owners and the general public on opportunities to make it easier to comply with the tax laws. More information, including a link to Form 13285A, Reducing Tax Burden on America’s Taxpayers, can be found on the TBR page of IRS.gov, Office of Taxpayer Burden Reduction.

WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Rev. Proc. 2007-70.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile,” said IRS Commissioner Doug Shulman. “We want the reimbursement rate to be fair to taxpayers.”

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business 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.

The new six-month rate for computing deductible medical or moving expenses will also increase by eight (8) cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2008-63 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Mileage Rate Changes

Purpose
Rates 1/1 through 6/30/08
Rates 7/1 through 12/31/08

Business
50.5
58.5

Medical/Moving
19
27

Charitable
14
14

January 15, 2008
4th quarter estimated tax payments1 due for 2007 tax year.

January 31, 2008
Deadline for employers to mail out Form W-22 and for payers to furnish Form 1099 statements to payees.
Deadline for self-employed individuals to file and to pay their tax and avoid an penalty for not making your 4th quarter estimated tax payment.

February 15, 2008
Deadline for employees who claim exemption from withholding to file a new Form W-43 with their employers.

February 28, 2008
Deadline for employers to file Form W-2 and Form 1099 statements with the Social Security Administration if filing on paper or magnetic media.

March 3, 2008
Deadline for farmers and fishermen who have a balance due on their taxes to file their individual tax return and pay the balance due without any late payment penalties.

March 17, 2008
Deadline for corporate tax returns (Forms 1120, 1120A, and 1120S), or to request automatic 6-month extension of time to file (Form 7004).
Final deadline to file an amended corporate tax return (Form 1120X) for tax year 2004 and still claim a tax refund.

March 31, 2008
Deadline for employers to file Form W-2 and Form 1099 Statements with the Social Security Administration if filing electronically.

April 15, 2008
Deadline to file individual tax returns (Form 1040, 1040A, or 1040EZ) or to request an Automatic Extension4 (Form 4868).
Last day to make contribution to traditional IRA, Roth IRA, or SEP-IRA for the 2007 tax year.

1st quarter estimated tax payments5 due for 2008 tax year.

Final deadline to file an original tax return (Form 1040) for tax year 2004 and still claim a tax refund. (I provide an easy, step-by-step approach to filing back taxes6.)

Final deadline to file amended tax return7 (Form 1040X) for tax year 2004 and still claim a tax refund. (Be sure to mail the amended return well before April 16th to make sure your tax refund will be processed in a timely manner.)

Deadline to file estate or trust tax returns (Form 1041) or to request an automatic 6-month extension of time to file (Form 7004).

Deadline to file partnership tax returns (Form 1065) or to request an automatic 6-month extension of time to file (Form 7004).

Final deadline for estates, trusts, or partnerships to file an amended tax return and still claim a tax refund for the year 2004.

May 15, 2008
Deadline for non-profit organizations to file information returns (Form 990), or request an extension (Form 8868).

June 16, 2008
2nd quarter estimated tax payments8 due for 2008 tax year.

Deadline for US citizens living abroad to file individual tax returns or to request an additional 4-month extension (Form 4868). (Tip: request an automatic extension by April 15th, 2008, instead.) I provide useful information for claiming the Foreign Earned Income Exclusion9 and the Foreign Tax Credit10, two tax breaks essential for Americans working abroad.

June 30, 2008
Deadline to file TD F 90-22.1 Report of Foreign Bank Accounts11 if you have over $10,000 held in foreign bank accounts.

September 15, 2008
3rd quarter estimated tax payments12 due for 2008 tax year.
Final deadline to file corporate tax returns (Forms 1120, 1120A, 1120S).

October 15, 2008
Final deadline to file individual tax returns (with extension). Final day for e-file.
Final deadline to file trust tax returns (Form 1041) if an extension was requested.

Final deadline to file partnership tax returns (Form 1065) if an extension was requested.

Final deadline to fund a SEP-IRA for tax year 2007 if you requested an automatic extension of time to file.

November 2008
Start planning any year-end tax moves.

December 31, 2008
Last day to make any 2008 tax year moves.
Marital status on this date determines your marital status for the whole year.

Source: Tax Calendars for 2008 (IRS Publication 509)13