3 commentsDecember 10, 2010

Breaking Tax News

Bush-era tax cuts to be extended two years

It appears that President Barack Obama has reached a deal with congressional Republicans that would extend the Bush-era tax cuts for two years and unemployment benefits for 13 months while also lowering the payroll tax by 2 percentage points for a year. His tax cut compromise is under Democratic attack, the plan worked out in secret talks with Republicans over several days.

Some estimates place the cost of the package around $900 billion or more the next two years by extending tax cuts from the Bush era that are due to expire at year’s end, renewing jobless benefits through the end of 2011 and granting a one-year cut in Social Security taxes.

Businesses no longer able to make their tax deposits at their local bank

Beginning 1/1/11, businesses will not be able to use paper coupons, form 8109, to deposit federal taxes to the United States Treasury Department at their local bank. Instead, they’ll be required to make deposits by telephone or on line using the Electronic Federal Tax Payment System. Businesses should register with EFTPS as soon as possible and on line because it takes a minimum of 15 days to get your confirmation.

IRS Announces 2011 Standard Mileage Rates

The Internal Revenue Service today issued the 2011 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, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

51 cents per mile for business miles driven
19 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

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.

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