Every year tax law changes ever so slightly. This can affect big payments, what you can and cannot pay on, and goes all the way down to determining how much you can and cannot write off down to the half-cent. As you are preparing for this year's tax season and tax write-offs, you still have to keep 2020 in the back of your mind. The moment you drop off your taxes for 2019, 2020 will be right there ready to become the center of attention.
We are a little over two months into 2020, and inching closer and closer to tax day. How are you feeling? Have you already submitted electronically? Are you still trying to tie up loose ends and gather all of your paperwork? No matter where you are in your tax journey at this moment, it's not hard to admit that tax season can be difficult. It takes time for any size company to gather paperwork and get everything in order, to make sure you have everything to prove your write-offs, and that you're writing off everything you can to hopefully get a good chunk back in return. Just like any tax law, how and what you can write off every year can and does change. It might not be a significant change, but it does indeed change every year. Just like any large or small part of changing tax law, this small dollar and cent change can add up at the end of a fiscal year. You need to stay educated be aware of these changes as best you can. If this is something you can't stay on top of, then please leave it in the hands of a professional. All of us at Pathways Consulting are here to help you with your tax needs in Summerville. Please don't hesitate to contact us! In this busy and stressful time of tax season, we like to stay as positive as possible, and remind our clients about the incentives taxes can bring to them and their companies. One of these positive factors is reminding our clients of what they can write off every year, and how that can help their company in the long run. One particular and popular write off that has seen some small, but serious, changes is how much in mileage you can write off per mile driven for business use, charitable use, and for medical or moving purposes. In this particular blog, we are going to be discussing the most recent changes in the mileage rate that began on January 1st of this year (2020), as something to look forward to. The mileage rate for the taxes you are currently working on or have already submitted will be a little different from these numbers. But remember, if you haven't already done your taxes, or your tax preparer is still working on them, the 2019 rates are still available and are known by all tax professionals. The importance of this blog is to give all of our clients and future clients something to look forward to and to make sure they are informed of the 2020 tax changes. For some these new milage rates will be a welcome change, for others it might be a little disappointing. These are the mileage rates for the use of a car, pickup truck, and panel trucks for 2020.
Business use, moving, and medical use saw the biggest changes for 2020. Driving for business went down one half-cent, and driving for medical and moving went down three cents. This might not seem a lot, but if your company has employees driving for hundreds or thousands of miles per year, those half cents or three cents per mile that you can no longer write off can make a difference. But, at least it is still something. The amount that can be written off per mile for charitable reasons did not change between 2019 and 2020. Keep in mind that for 2019 taxes, you still have those whole half cent and three cent differences, so use those to your advantage and don't forget to write them off! What created and set these new tax rates you might ask? For mileage driven for business reasons, it is determined on the yearly fixed rate of the operation of vehicles. For medical and moving purposes it is based on the variable cost o that tax year. Business owners, please be warned. You can only write off the mileage for five or fewer cars used at one time. If you have more than that, only five of the car's mileage can be written off. Also, if the car has already been claimed under another deduction, then the mileage cannot be claimed as well. It has to be one write off or the other. While preparing for next year's taxes and planning your write-offs, there are still a few important things that you need to keep in mind. Due to changes from the Tax Cuts and Jobs Acts, taxpayers will not be able to claim a miscellaneous deduction for unreimbursed employee travel expenses any longer. When it comes to the expenses of moving beyond the gas mileage, the only time you can claim moving expenses on your taxes is if you're a member of the military and you are under orders to move. Unless you fit that description, no other write-offs about moving can be included in your taxes. If it's for your 2019 taxes or your upcoming 2020 taxes, please be very careful and cautious about how and what you're writing off. If this is a grey area for you personally, again, please hire a professional tax preparer to handle this for you. These small changes that happen every year in write-offs are known to them because it's their job to know all of this information. Using a professional tax preparer for any size company could save you more money and get you more in your tax return in the long run. Tax season can be a difficult time, but it doesn't have to be. We are here to give you the best tax service and help in Summerville, and our doors are always open! Keep working hard, and make sure to get your taxes in by April 15th!
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AuthorThe Pathways Team Archives
September 2020
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