In 2020, the optional standard mileage rate used to calculate the deductible costs of operating an automobile for business decreased by one-half cent, to 57.5 cents per mile.
As a result, you might claim a lower deduction for vehicle-related expenses for 2020 than you can for 2019.
Businesses can generally deduct the actual expenses attributable to the business use of vehicles. This includes gas, oil, tires, insurance, repairs, licenses and vehicle registration fees.
In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, depreciation write-offs on vehicles are subject to certain limits that don’t apply to other types of business assets.
The cents-per-mile rate comes into play if you don’t want to keep track of actual vehicle-related expenses.
With this approach, you don’t have to account for all your actual expenses, although you still must record certain information, such as the mileage for each business trip, the date, and the destination.
Using the mileage rate is also popular with businesses that reimburse employees for business use of their personal vehicles.
Such reimbursements can help attract and retain employees who drive their personal vehicles extensively for business purposes.
Why? Under the Tax Cuts and Jobs Act, employees can no longer deduct unreimbursed employee business expenses, such as business mileage, on their own income tax returns.
If you do use the cents-per-mile rate, be aware that you must comply with various rules. If you don’t, the reimbursements could be considered taxable wages to the employees.
The rate for 2020 Beginning on January 1, 2020, the standard mileage rate for the business use of a car (van, pickup or panel truck) is 57.5 cents per mile.
It was 58 cents for 2019 and 54.5 cents for 2018. The business cents-per-mile rate is adjusted annually.
It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, such as gas, maintenance, repair and depreciation.
Occasionally, if there’s a substantial change in average gas prices, the IRS will change the mileage rate midyear.
There are some situations when you can’t use the cents-per-mile rate. In some cases, it partly depends on how you’ve claimed deductions for the same vehicle in the past.
In other cases, it depends on if the vehicle is new to your business this year or whether you want to take advantage of certain first-year depreciation tax breaks on it.
As you can see, there are many factors to consider in deciding whether to use the mileage rate to deduct vehicle expenses.
At David Mills CPA, LLC, our expert can help if you have questions about tracking and claiming such expenses in 2020 — or claiming them on your 2019 income tax return.
David Mills CPA, LLC has offices in Morton and East Peoria.
Keeping track of key tax-related deadlines for your business is an ongoing concern. Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2020.
Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you.
Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.
January 31 is the deadline to File 2019 Forms W-2 “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
Provide copies of 2019 Forms 1099-MISC, “Miscellaneous Income,” to recipients of income from your business where required.
File 2019 Forms 1099-MISC reporting nonemployee compensation payments in Box 7 with the IRS. File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2019.
If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it.
However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2019.
If your tax liability is less than $2,500, you can pay it in full with a timely filed return.
If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. (Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944, “Employer’s Annual Federal Tax Return.”)
File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2019 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs.
If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.
February 28 File 2019 Forms 1099-MISC with the IRS if 1) they’re not required to be filed earlier and 2) you’re filing paper copies. (Otherwise, the filing deadline is March 31.)
March 16 If a calendar-year partnership or S corporation, file or extend your 2019 tax return and pay any tax due.
If the return isn’t extended, this is also the last day to make 2019 contributions to pension and profit-sharing plans.
If you have questions about meeting applicable deadlines or to learn more about filing requirements, contact David Mills CPA, LLC. We have offices in Morton and East Peoria or can arrange a video conference with you.
Are you a small to medium sized business near the Peoria, IL area? Do you need help with business tax preparation? Then you have come to the right place. It can be confusing and difficult to prepare your business’ taxes, so we are here to help clear up any confusion. Each business is different as well, and we know the ins and outs of taxes. Your taxes will be different depending on if:
We can help you minimize your taxes each year! Each year, businesses lose tons of money because they aren’t aware of regulations and constantly changing laws. David Mills CPA is here to help guide you through your tax season.
We also provide tax preparation near the Peoria, IL area to individuals looking for guidance. You may think your taxes are simple, but that couldn’t be farther from the truth. There are constant changes to the tax laws. Each year there are hundreds of changes. Can you keep up with those tax laws and regulations? Probably not. But we can! We will help you get the biggest return possible.
Contact us today and we will help you or your business with tax preparation. We look forward to being able to guide you or your business through the maze that can be taxes. It’s better to prepare now so you have peace of mind all year! Give us a call today.
April 15th is behind us and if you’ve filed your tax return you’ve probably had the chance to see how the Tax Act affected you. Here are some thoughts on this past tax season and about the tax seasons going forward:
There are some big changes that are happening and it will be interesting to see their effects. It’s best to stay on top of the changes. We can help you there! Contact us about your financial needs.
This tax season, make sure you are getting the tax return you deserve with our help. Taxes are a complex system and having a knowledgeable and experienced professional at your back can be the best way to improve your return. We offer tax planning and preparation for both individuals and small to medium-sized businesses.
For business owners, your personal and businesses taxes are closely linked. It’s especially important for business owners to have proper tax preparation. One issue many business owners face is that sometimes business owners think only of yearly taxes, but they are subject to many more such as:
We have the experience and knowledge required to guide you through the many regulations and laws. Minimizing these taxes is a goal of every business. We can help you and your business through our advising!
Many individuals believe that their tax return is relatively simple. You can go the simple route, but you are likely making mistakes and missing out on deductions you are able to claim. We can help you get the most out of your tax return.
Get the most out of your tax return, call us today so we can provide you with professional tax preparation. You’ll see the difference for yourself and your business.
If you are like most people when it comes to taxes, you don’t feel confident in what you are doing. A tax consultant can help relieve stress and reduce mistakes while filing taxes. Check out five reasons why you should consider hiring a tax consultant.
Have you found a mistake on a previous tax return in the past three years? You can work with a tax constant to file an amended return. A consultant can help to minimize any damage that may have been caused. It can also provide you with peace of mind in knowing that your tax return will be properly handled.
Have you gotten married or divorced in the last year? If so, your tax filing may be affected.
Filling Your taxes can be time-consuming. A tax consultant will be able to work quickly and efficiently. They will be able to save you the stress of making sure your taxes are done right.
Taxes can become confusing if you live and work in different states. If you’ve recently moved to a new state it can be confusing as well.
A tax consultant will be able to assist you in the different states’ tax rules and can help you sort out any issues that arise.
A common mistake of new business owners is waiting to hire a tax professional. How you file your taxes the first year can impact future tax filings. It is important to start off right.
David Mills is proud to assist our customers with their taxes and make recommendations that fit your needs. If you need assistance with your taxes, contact David Mills today. We look forward to working with you!
With tax season approaching, it is time to start planning and preparing for taxes. In order to effectively plan for taxes, it is important to plan with an experienced professional. Continue reading to learn about David Mills’ approach to tax planning and tax preparation.
How does David Mills help you and your company with effective tax planning? We take into consideration the following things:
If you are a business owner, we take into consideration both your personal and business objectives. At David Mills, we take a long-term approach to planning. Our team will provide several planning scenarios that consider both your short and long term goals.
In recent years, there have been over 300 tax law changes and revisions. Several of the laws have limited time frames. The David Mill’s team keeps up with all of the current tax law developments that affect you and your business.
We also can answer any questions about any returns that you have prepared yourself or by someone else who prepared them for you. Our team can review your past tax returns to ensure they are accurate and provide you with advice. Learn more about our tax preparation service.
As tax season approaches, it is time to call David Mills. Our team will be happy to help you with both planning and preparation for taxes. Contact our team today for all of your tax needs!
If you own a business, you have probably heard about the Section 199A Deduction. This is also known as a Qualified Business Income Deduction. You may wonder what exactly this is and how does it work? David Mills CPA has put together information in order to help you better understand the 199A Deduction.
The 199A Deduction reduces taxable income, but not adjusted gross income. This deduction does not lower Illinois taxable income or does not lower self-employment tax.
The 199A Deduction is available to sole proprietors, partners, and S corporation shareholders. It is not available to C corporations.
The calculation for the 199A Deduction can be complex. It is partly dependent on the taxpayer’s total taxable income. There are no limits for married filing jointly taxpayers with $315,000 or less of taxable income. There are typically no limits on the deduction regardless of whether the business is a specified service trade or business.
The deduction is the lesser of the Qualified Business Income or 20 percent of taxable income minus long-term capital gains.
Limits exist for married filing joint taxpayers with taxable incomes between $315,000 and $415,000. A limit begins to phase in based on wages and/or qualified property acquisitions.
If you earn an income above $415,000, limits are determined based on W-2 wages and qualified property acquisitions. This deduction is not available to the taxpayer under certain circumstances.
If you are looking for more information or need help with your 199A Deduction, contact David Mills CPA today. Our team of experts will be happy to assist you with all of your financial needs. David Mills offers financial and accounting services to small and medium-sized businesses, as well as individuals in Peoria, IL as well as the surrounding areas. We look forward to hearing from you!