Archive for the ‘Tax’ Category

Ohio’s Identity Theft Quiz Returns – With Modifications

Tuesday, February 2nd, 2016

Last year, Ohio’s Department of Taxation rolled out the Identification Confirmation Quiz, which required many Ohioans to prove their identities before receiving a refund. Needless to say, there were more than a few unhappy campers. However, despite its shortcomings, the quiz did what it was supposed to do – helped thwart tax fraud, which is why the Ohio tax quiz will make another appearance in 2016.

Read Also: How To Recover From Identity Theft & Tax Fraud

So, how successful was the quiz at stopping fraudsters from stealing refunds? Very. One Ohio news source reported that the quiz helped identify an estimated 234,336 fraudulent refund requests worth $259.1 million in 2015. The year prior, only 64,693 requests were reportedly stopped.

“We are committed to combatting tax fraud and ensuring that tax refunds are paid only to legitimate filers,” said Joe Testa, Ohio tax commissioner, in an op-ed piece on the Ohio Bar Association’s website on Jan. 6. “We believe we’re among the leaders in the country in aggressively combatting these fraud schemes. Last year, the Identity Confirmation Quiz was instrumental in that fight.”

Testa did go on to say that, after reviewing feedback from last year’s tax season, changes were made to the types of questions asked in an attempt to improve the entire process while facilitating a better experience overall. He said that further improvements were made to the department’s tax return analysis, which should result in fewer taxpayers from being required to take the quiz in order to receive a refund.

Tax fraud and identity theft continues to be a major problem throughout the nation, but you don’t have to stand by and do nothing. This article will provide you with some tips to help reduce your risk of becoming a victim.

By Lisa Beamer, CPA (New Philadelphia office)

Want more safety tips to help get you through tax season unscathed? Check out these articles:

Join The Fight Against Identity Theft & Income Tax Fraud

When Scammers Demand That You Pay Up, IRS Says You Should Hang Up

Let’s Talk About The F-Word

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Join The Fight Against Identity Theft & Income Tax Fraud

Friday, January 29th, 2016

Income tax identity theft and refund fraud has become a huge problem over the last few years; and while billions of dollars are finding their way into the pockets of fraudsters, the IRS is working hard to shut down these schemes.

The IRS paid roughly $5.8 billion dollars in fraudulent refunds to identity thieves over the course of the 2013 filing season. While that is a huge number, it could have been a lot worse. During the same time period, the amount the IRS successfully prevented or recovered totaled around $24.2 billion. But these statistics only take into consideration the fraud we know about.

Identity theft isn’t just a threat during tax season, scammers are exploiting a lot of cracks in your armor. Listen to episode 12: the great data saver on unsuitable on Rea Radio for insight from Joe Welker, CISA, Rea’s IT Audit Manager

The Unknown Number

While it is nice to know that the IRS is working hard to prevent identity theft and refund fraud, the truth is that we don’t yet have all the information to determine how bad the income tax fraud epidemic really is. This means that we continue to be at risk of becoming a fraud victim again this tax season. Perhaps if we knew how many fraudulent tax returns went on to be processed and how many billions of dollars were paid out to scammers looking to make a quick buck we could finally make some educated assumptions about the likelihood of being defrauded out of your refund check.

I don’t like not having all the necessary information.

Read Also: Ohio Department of Taxation Stops Thieves From Stealing Millions

This year, income tax fraud is expected to be higher than ever. This video, produced by abc6 out of Columbus, Ohio, shines more light on the topic of identity theft in Ohio.

Calling In Reinforcements

The IRS has realized that identity theft and refund fraud are threats that are showing no signs of going away. So the agency has requested help. The Internal Revenue Service, in cooperation with state tax administrators and tax industry leaders, has formed a public-private sector partnership to identify and test more than 20 new data elements on tax return submissions that will be shared with the IRS to detect and prevent fraudulent filings. The software industry is doing its part by putting enhanced identity validation requirements in place to protect customers and their personal information from identity thieves.

As of October 2015, 34 state departments of revenue and 20 tax industry members have signed memorandums of understanding regarding coalition’s roles, responsibilities and information sharing measures. More states are expected to sign on later.

Taxpayers Are Encouraged To Fight Back Against Fraud

Over the last 3 years, the IRS has initiated more than 3,000 fraud investigations. Those investigations have gone forward to convict and sentence close to 2,000 thieves to around 40 months in prison apiece. But there is still much to be gone. They are doing their part.  We as taxpayers have to do ours.

In January, the IRS launched the “Taxes. Security. Together.” initiative to educate taxpayers on income tax identity theft and ways they can safeguard their information and protect themselves. According to the agency, there are several ways you can protect yourself from identity theft – especially during tax season:

  • Keep your computer secure
  • Avoid phishing email and malware
  • Protect your personal information

Above all, choose your tax preparer wisely and make sure they take their responsibility to safeguard your information very seriously. A tax preparer can also help if you do encounter a situation in which your information could be compromised.

By Ashley Matthews, CPA (Dublin office)

Want to take steps to ensure that you won’t be a fraud victim this year? These articles feature information that can help.

Should I still be concerned about identity theft and tax fraud?

How can you protect yourself from tax fraud

Identity Theft Prevention: Tips To Reduce Your Risk of Becoming a Victim

How To Recover From Identity Theft & Refund Fraud

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The 2016 Tax Season Is In Full Swing, Are You Ready?

Friday, January 22nd, 2016
Tax Planning - Ohio CPA Firm

Tax season doesn’t have to be the stuff nightmares are made of. Believe it or not, it can be a smooth, uneventful process. Just remember, preparation is the key to tax season success.

Your holiday decorations have been tucked away, subzero temperatures have found their way to your neighborhood and your W-2’s are in the mail … tax season is upon us once again!

This year, don’t let the hunt for tax forms, pay stubs and receipts stress you out. Instead, take a few minutes to brush up on some of our best tax season tips and avoid becoming a victim of the last-minute filing chaos that ultimately ensues in April.

Top 5 Tax Season Planning Tools

  1. File Faster With This Tax Prep ChecklistIt’s that time of year again – time to gather your information and prepare to file your tax return. You may be surprised how fast the entire filing process goes if you spend a little time preparing before you make your appointment with the tax preparer. Get your tax prep checklist here to avoid missing the filing deadline.
  1. From Toddler To Teen And Beyond: Tax Breaks For Families: With parenthood comes many rewarding experiences – and expenses. You hear about how expensive it is to raise a child, but you never really know what to expect until that little bundle of joy enters your life. From diapers, pre-school, extracurricular activities and saving for college, the costs of raising kids adds up fast. Read on to discover what tax breaks are available to families?
  1. How To Win Tax SeasonBy mid-January, statistically, most Americans have already abandoned their New Year’s resolutions – those promises you make to yourself to hit the gym, get more sleep or become more organized. But hopefully, you’re not like most Americans – especially if better organization is the goal. Today I want to urge you not to give up at least not until April 15. Keep reading to find out how you can win tax season with these four tax prep tips.
  1. Taxes Are Like FishingAre you wondering where I’m going with this, wonder no more. You are sure to find a lot of valuable insight in this episode of unsuitable on Rea Radio. Episode 9, Taxes Are Like Fishing, features Melane Howell, CPA, a tax manager at Rea, talking about the importance of strategic preparation, just in time for tax season. Listen now for great insight and sound tax tips that are sure to make this tax season the easiest one yet!
  1. The Truth About Tax ExtensionsWhile the first four months of the year is a busy time for accountants, we know that things don’t always go according to plan. But instead of enduring penalties for filing a late return, you may find that filing a tax extension is a better option. Contrary to popular belief, tax extensions aren’t as bad as you may have heard. Read on to learn the truth about tax extensions, and don’t forget to check out the slideshow.

Tax season doesn’t have to be the stuff nightmares are made of. Believe it or not, it can be a smooth, uneventful process. Just remember, preparation is the key to tax season success.

Need help filing your individual or business tax return? Email Rea & Associates for help. Our team of tax advisors can help you change your perspective of tax season into one that is more positive for everyone.

By Lesley Mast, CPA (Wooster office)

Check out these articles for more helpful tips for individuals:

Cyber Crime: It Can Happen To You

You Can Still Have The Final Say After Death

Debt vs. Taxes: Should You Pay Off Your Loan

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Egg Nog & Tax Tips: Top 5 Posts In December

Wednesday, January 6th, 2016

December is such an exciting time. Shopping, baking, decorating and spending time with family and friends celebrating keeps a frog busy. But, in-between the office parties and family gatherings, the team and I were still able to address some of your end-of-the-year questions and concerns.

From the updates we received from our pals over on Capital Hill to year-end tax tips, there was certainly a lot to write about this month. These were the top-read posts in December

  1. Easy Year-End Tax Tips For Business Owners: There’s no doubt about it, this time of year is busy! I’m willing to be that sitting down at the computer to research tax deductions is the last thing on your mind. You’re in luck! We’ve done the work for you. Click here for some great tips, deductions and insight that will help you keep more of your hard-earned money in your bank account.
  2. Employers: Are You Ready To Change The Way You Withhold Municipal Tax Payments?:  Ready or not, all Ohio municipalities will be welcoming a slew of new provisions designed to bring about a unified system of income tax reporting. House Bill 5 was signed into law by Gov. Kasich on Dec. 19, 2014. The bill, which was championed by the Ohio Society of CPAs and supporters, helped streamline several key measures that help establish meaningful municipal tax reform. Per the legislation, many key provisions are scheduled went into effect Jan. 1 of this year. Read on for Four facts about the changes you need to know.
  3. Congress Gives Taxpayers An Early Christmas Present: Year after year, Congress promises to address the future of many expired tax provisions, and year after year they fail to make a definitive decision – opting only to pass legislation that extends the provisions for another year. In the meantime, taxpayers are expected to take on the impossible task of navigating the terrain amidst legislative uncertainty. Happily, things are about to change. Read on to learn why.
  4. How Far Back Can The IRS Go For Tax Auditing? – As a CPA I’m frequently asked, “How far back can the IRS look to audit my tax return?” That’s a great question. Can the IRS go back and audit your tax return from five years ago? 10 years ago? 25 years ago? Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax. Keep reading to find out how far back they can go.
  5. Cyber Crime: It Can Happen To You: Fraudsters don’t take holidays. In fact, they tend to be more active this time of year because they believe we are more likely to let our guards down. I don’t intend on falling for any of their traps, and I encourage you to do the same. Check out what you can do to protect yourself.

Now that December is history, let’s look forward to a great 2016. Stay tuned as we provide you with the latest and greatest news in the business and financial world. While you’re at it, don’t forget subscribe to our blog to receive email reminders when new stories are posted.

You can also ask your own question by filling out the simple form at the top, right side of this page.

Finally, remember that the team at Rea is always available to discuss your specific business issues in more depth. All you have to do is email Rea & Associates and we would be happy to set up a time to talk more.

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16 Resolutions For Business Growth In 2016

Monday, January 4th, 2016
Be Accountable In 2016 | Rea & Associates | Ohio CPA Firm

Might we suggest 16 resolutions to help your company prosper in 2016?

New Year’s resolutions aren’t just great ways to set personal goals; they can help keep us on track professionally as well. This year, instead of worrying about which goal you are going to pick from the New Year’s Resolution menu, why not consider committing your energy and resources into ways that will improve the overall health of your business?

Might we suggest 16 resolutions to help your company prosper in 2016?

1. Celebrate your amazing team.

If you’ve been in business for a while, chances are you wouldn’t be where you are today without your team. Just remember that if you don’t work to retain your top performers, you run the risk of losing them. Start celebrating your human capital.

2. Make a gift, but make sure it’s effective.

When we give a monetary gift to a not-for-profit organization, we want to know that it’s going to be used in the best, most effective way possible. Make sure your money is well spent.

3. Design a better retirement plan.

The way your company’s retirement plan is designed can be a huge motivator for your employees. If your plan has a good plan design, participants will be more willing to invest in it. Work with a retirement plan expert to find a retirement plan design that works for you.

4. Review your will, estate plan and buy-sell agreement.

Legal changes over the last few years may have made updating these documents necessary, not to mention any personal changes that may have taken place. It’s just good practice to make sure this important paperwork gets updated regularly. It could get messy if you forget.

5. Develop a line item in your budget for continuing education.

Investing in yourself and your employees is a good way to engage your workforce. One way is to add dollars to the budget for training and continuing education. Find out what else you can do to promote employee retention.

6. Improve your company’s cash flow.

Easier said than done, right? Just remember that you can’t spend the bottom line profit, but you can use the cash flow to reinvest in your business and community. A sustainable cash flow model will ultimately increase the value of your business.

7. Know what your business is really worth.

Your business is easily your most valuable asset. So, how can you nurture its growth if you don’t know how much it’s worth? Discover why it’s so important to know the value of your business.

8. Develop a wellness program.

Healthcare costs are high and one way companies are taking control is by introducing a wellness program. As with any new plan, several factors will greatly increase your company’s success.  Start planning your wellness program implementation and soon you will be saving money.

9. Upgrades for the business.

It seems like there are always better ways to get things done. Perhaps 2016 is a good time to make a few upgrades. In the process, your purchase could be good for a deduction at tax time.

10. Schedule a family vacation.

A successful business has the understanding and support of your family. Long hours … late suppers … numerous emails and a 24/7 mentality have become just another part of the routine. Reward yourself and your family with a family vacation. A vacation isn’t just good for your peace of mind, it’s good for your business.

11. Save more for retirement.

It’s always a good idea to keep your retirement goals top-of-mind, which is why you should evaluate your current retirement plan situation and determine if you need to make any changes to get further ahead in 2016. Ask your advisor if you are setting aside as much as you could (and should) be.

12. Defend your cyber space.

Hackers and fraudsters are stopping at nothing to get to your data. Whether they have plans to steal your system’s information to sell to other criminals or are trying to make a quick buck by holding your data for ransom, if you don’t have a disaster recovery plan you and your business could be in serious trouble. Make 2016 the year you get your data security plan in place.

13. Meet with all your advisors at least once a year.

You work with a lot of people over the course of your career and it’s important to maintain those relationships – regardless of whether you will need their services or not. Set aside some time to meet with your accounting, legal, estate planning, investment, banking, retirement and other advisors, even if it’s just to chat. An impromptu meeting could reveal opportunities you didn’t know were there.

14. Establish a fraud hotline.

The Association of Certified Fraud Examiners has found fraud hotlines to be the most effective way for detecting and preventing fraud. Don’t let occupational fraud destroy your businesses.

15. Stay organized … for real, this time.

Every year it happens. You promised yourself that this year would be different. Now, once again, you are rushing to your gather receipts, remember how much money you spent at last year’s company retreat, and backtrack through balance sheets. Wouldn’t it be nice not to have this year-end stress anymore? By implementing a few simple procedures, you can avoid another crunch-time crisis.

16. Trim the fat.

If you are really looking for a way to make a significant reduction this year, take a look at your inventory. If you are carrying around some extra weight, chances are your business is feeling the pinch. This simple 3-step program will get you back on track.


Be Accountable In 2016

Have you identified a few resolutions to begin implementing over the course of 2016? Great! Need help holding yourself accountable? Send your list of 2016 New Year’s Resolutions to Rea & Associates and one of our business consultants will work with you to make this your best year in business yet!

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IRS Gives Business Owners The Gift Of More Time

Monday, January 4th, 2016
Form 1095 Deadline Extended - Ohio CPA Firm

Failure to comply with provisions set forth in the ACA can lead to catastrophic penalties, which is why we have actively sought to inform business owners of their responsibility to file Form 1095-C. Unfortunately, we knew that while we could successfully inform many businesses in advance of the original deadline – some were going to be left behind. Time, it seemed, just wasn’t on our side. But the IRS saw this threat and, as 2015 came to a close, took action to delay the 1095-C reporting deadline - (hopefully) keeping many small businesses intact.

While some taxpayers may be rejoicing after learning that the IRS has delayed 1095-C reporting deadline, it’s important to remember that this late Christmas gift may not be as great as it seems - especially when it comes to meeting the deadline to file your individual tax return.

Read Also: Make BIG Changes Or Face BIG Fines

1095-C Reporting Deadline Postponed

As you may already know, failure to comply with provisions set forth in the Affordable Care Act can lead to catastrophic penalties, which is why we have actively sought to inform business owners of their responsibility to file Form 1095-C. Unfortunately, we knew that while we could successfully inform many businesses in advance of the original Jan. 31 deadline – some were going to be left behind. Time, it seemed, just wasn’t on our side. But the IRS saw this threat and, as 2015 came to a close, took action to delay the 1095-C reporting deadline - (hopefully) keeping many small businesses in tact.

Employers now have until March 31 to provide employees with Form 1095-C and the deadline to file the form electronically with the IRS was moved to June 30. The IRS also extended the deadlines for 1095-Bs to these new dates as well.

Remember, all 2014 large employers are required to file these forms, based on 2015 data. Per employee penalties will accrue for those who file late or fail to file. Some businesses may be considered large employers under the ACA, and not even know it; but there are ways to determine your employer status before it’s too late.

That Sounds Great, Except …

Now for the bad news – there will be some individual tax payers who may not get these forms to us until the first week of April. For most taxpayers, this will simply require some additional due diligence with no delay to filing their tax return. However, there will be some individuals who will likely have to file an extension if they do not get their forms in time. Don’t be afraid of tax extensions. As long as you work proactively with your tax advisor, there is absolutely nothing to worry about. In fact, filing a tax extension could be very helpful. Click here to get “The Truth About Tax Extensions”

You Do Not Have Permission To Do Nothing

You’ve been given extra time. Now let’s make the most of it. Rea & Associates is still accepting new clients for 1095-C Form preparation projects, And, as we have previously stated, the top payroll companies are already booked to capacity with wait lists growing by the day. If you haven’t started on this project yet and know that you should, take advantage of this delay and email me for help. My team here at Rea can also help you determine if your business is considered a large employer – which can keep you from being blindsided when the IRS determines that you do, indeed meet the large employer qualifications.

By Joe Popp, JD, LLM (Dublin office)

Want to learn more about your responsibilities under the ACA? These articles will provide you with more insight:

The Cost Of Reimbursing Employees For Health Care

Obamacare: Discrimination Is Not An Option

Secure Form 1095-C Help Now And Avoid Penalties

 

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Business Leaders Were Reading What?!

Monday, December 28th, 2015

2015′s Most Popular Blog Posts

Best Business Blog Posts 2015- Ohio CPA FirmIf you take a moment to scroll through the list of categories, authors and archives on the right-hand side of this page, it’s pretty clear to see just how active Rea’s team of experts are when it comes to providing leaders in the business community with accurate, timely and easy to digest content. We are fortunate to have so much experience and expertise on our staff, and their eagerness to serve you better has allowed us to maintain a bi-weekly electronic newsletter, a quarterly print newsletter, three blogs and a handful of electronic segment specific newsletters. That’s a lot of content – but we are not even thinking about slowing down! I hope you hang around my lily pad for awhile. I’m pretty sure you’ll find a lot of great little tidbits to read about in 2016 too. Until then, I want to invite you to take a look at some of our most popular blog posts and articles. And, if you haven’t already, take a moment to look through the newsletters we offer and sign up to have news, tips and valuable information delivered to your inbox all year long!

Top 5 Dear Drebit Posts In 2015

Dear Drebit is updated every few days with timely information and advice. In addition to covering current trends and issues, readers are also invited to ask financial and business questions on the page, which will be answered by one of Rea’s industry experts. Here are last year’s top posts:

  1. How Far Back Can The IRS Go For Auditing?
  2. Theft Safeguards To Cause Tax Return Delays In Ohio
  3. Six Things 401K Plan Sponsors Need To Do Now
  4. New Adjustments Will Affect Your 2015 Tax Return
  5. File Faster With This Tax Prep Checklist

5 Most Popular Posts On Brushing Up Blog

Brushing Up: The Dental Accounting Blog features a variety of finance and business advice specifically tailored to dental professionals. From purchasing a practice, knowing what to expect from a career in dentistry and hiring the best staff for your practice to general accounting advice, tips for cashing out at retirement and tax tips, this blog is a valuable tool for dental professionals who are looking for ways to secure long-term success in their career. The year’s most-read blog posts are:

  1. How Sales & Use Taxes Apply To Ohio Dental Practices
  2. 6 QuickBooks Tips Every Dentist Should Know
  3. Could A Crown Be A Tax Deduction?
  4. 10 Year-End Tax Planning Strategies For Dentists
  5. Buying An Established Dental Practice? Master The Changeover 

Cultivating Your Business Readers Choose Top 5 2015 Posts

The Cultivating Your Business blog is a resource provided to clients and visitors on the firm’s Know & Grow website. Updated a few times per month, business owners have access to advice, tips and general insight into how to grow their businesses and realize an optimal return on their investment upon retirement. Here are the top blog posts from last year:

  1. Bad Buy-Sell Agreement Claims Another Family Dinner
  2. Will Your Summer Reading List Make You A Better Business Owner?
  3. WARNING: Free Business Valuation Offer Is Unbelievable
  4. Uncover The Secrets To Cashing In On Your Business
  5. How To Communicate To Your Employees That You’re Selling Your Business

Top 10 Articles In Rea’s Library In 2015

In addition to our blogs, the Rea team publishes a lot of other valuable content in print and electronic newsletters. We make sure that all these articles are easily accessible in our article library. This is where you will find many of our niche pieces as well as a lot of general accounting tips and insights. Take a look at some of our most popular posts over the last year.

  1. What Is The Mid-Quarter Convention?
  2. Dangers Of Paying Under The Table
  3. Revenue Recognition Changes Are Coming
  4. Football Ticket Deductions
  5. 401K Loans And Keeping Your Plan In Compliance
  6. Take Control Of Your Vendor Master In Nine Steps
  7. Why Your Traditional Employee Management Method Is Failing
  8. The Birth Of The Taxpayer’s Estate
  9. Parting Is Such Sweet Sorrow: But What About Your 401K?
  10. Purchasing Cards Compromise Business Security
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Congress Gives Taxpayers An Early Christmas Present

Monday, December 21st, 2015

PATH Act Makes Several Key Tax Provisions Permanent

PATH Act Makes Several Key Tax Provisions Permanent | Rea & Associates | Ohio CPA Firm

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. Read on to learn more.

There is nothing like waiting until the last minute to complete a task. We’ve all been there and we all promise we’ll never do it again. Unfortunately (especially when it comes to determining the future of several valuable tax provisions) our government has fallen victim to the same bad habit.

Year after year, Congress promises to address the future of many expired tax provisions, and year after year they fail to make a definitive decision – opting only to pass legislation that extends the provisions for another year. In the meantime, taxpayers are expected to take on the impossible task of navigating the terrain amidst legislative uncertainty. Happily, things are about to change.

Listen To Our Podcast Taxes Are Like Fishing To Learn More About Tax Strategy

Congress finally made good on its promise to make take a more definitive stance on the future of many popular tax provisions last week when members voted in favor of making many of them permanent. Other tax provisions received a temporary extension. The legislation, Protecting Americans From Tax Hikes Act of 2015 (PATH Act), is retroactive to Jan. 1, 2015, and provides taxpayers a level of certainty that they have been without for quite some time.

This legislation offers a lot of relief to individuals and businesses, alike. Here’s an overview of what you can expect moving forward.

Key Tax Provisions Made Permanent By The PATH Act:

  • 15-year recovery period for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Extension and modification of the research & development credit, including allowing certain small businesses to claim the credit against AMT liability and employer’s payroll (ie: FICA) liability
  • 179 expensing limitations and phase out increased to $500,000 and $2 million respectively
  • Exclusion of 100 percent of gain on certain small business stock
  • Extension of tax-free distributions from IRAs for charitable purposes
  • Earned income tax credit
  • Child tax credit

Key Provisions Extended Through 2019

  • Extension of the new markets tax credit in which Congress authorized $3.5 billion allocation of credits each year from 2015 until 2019
  • Extension and expansion of the work opportunity tax credit
  • Bonus depreciation is extended at 50 percent for 2015 through 2017, 40 percent for 2018, and 30 percent for 2019

Key Provisions Extended Through 2016

  • Extension and expansion of empowerment zone tax incentives
  • Two-year moratorium on the 2.3 percent medical excise tax imposed on the sale of medical devices
  • Extension of energy efficient commercial buildings deduction

In addition to the extension of key tax provisions, the PATH act also puts more scrutiny on the operations of the IRS. IRS agents will be held accountable for knowing and acting in accordance with the taxpayer bill of rights and prohibits the use of IRS business for political gain.

The passage of the PATH act is a huge victory for American taxpayers, and will allow them to partner more efficiently and effectively with their tax advisors on key issues in years to come without the uncertainty that has plagued them for many years.

Be sure to set up an appointment to speak with your tax advisor or financial planner to talk about how the PATH act will impact your ability to take advantage of tax planning strategies. Do you have questions about specific aspects of the PATH act? Fill out the form on the top, right side of this page to submit your question to Dear Drebit.

By Ashley Matthews (Dublin office)

Are you looking for more ways to save on your tax bill? These articles can help:

Year-End Tax Tips For Business Owners

Dos & Don’ts of Gifting Donations

Should I Make A Big Purchase To Cut Taxes?

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Mileage Rates Will Be Reduced In 2016

Friday, December 18th, 2015
2016 Mileage Rates | Rea & Associates | Ohio CPA Firm

Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Read on to find out the 2016 mileage rates.

Drivers were able to get a little more money back for every mile driven in 2015, but next year’s road map tells a different story.

The IRS announced that most of the 2016 optimal standard mileage rates would either remain the same or would be lowered going in to 2016. Among the rates seeing a decrease, were the standard mileage rates for business use of a vehicle, which were reduced to 54 cents per mile – a decrease of 3.5 cents over 2015’s rate of 57.5 cents per mile.

Read Also: 5 Tax Deductions To Ease Your Business’s Tax Burden

How Are Optimal Standard Mileage Rates Determined?

Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Just be aware that you will not be allowed to claim both.

For example, if you have plans of claiming an accelerated depreciation on your vehicle, then you will not be able to claim the business standard mileage rate as well. If you are a business owner, you should also note that the standard rate is not available to fleet owners, or those who use more than four vehicles simultaneously. Additional details and rules can be found in Revenue Procedure 2010-51.

Different Rules For Different Road Trips

Here are some of the other common rates drivers should be aware of:

  • The miles you drive for medical or moving purposes will be calculated at 19 cents per mile driven.
  • Those driving their vehicles as a service to charitable organizations may calculate their deductions at 14 cents per mile driven.
  • The portion of your business standard mileage rate that will receive depreciation treatment in 2016 will continue to be 24 cents.

Also in its announcement, the IRS noted an adjustment to the standard automobile cost allowable under the fixed and variable rate (FAVR) plan, which considers the costs taxpayers incur by driving their own vehicles for work-related purposes. In 2015, standard automobile costs may not exceed $28,000 (not including trucks and vans), which is a decrease of $200 from 2015. The maximum standard automobile cost for trucks and vans, however, is $31,000 – an increase of $200 over the 2015 rates).

Travel For Tax Savings

If you use your vehicle for business don’t forget to track your mileage. Every mile you travel is an opportunity to realize real tax savings. A financial advisor can help you find these opportunities as well as many others.

By Lesley Mast, CPA (Wooster office)

Are you looking for ways to help you plan for the upcoming tax season? Check out these articles for some great tips:

Easy Year-End Tax Tips For Business Owners

How Long Should You Keep Financial Documents?

What Could Ohio’s Small Business Investor Income Tax Deduction Do For Me?

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