Because of recent increases in gas rates, the amount you can deduct for business use of your car per mile will increase from 51 cents per mile, which it was from January 1, 2011 through June 30, to 55.5 cents per mile starting July 1, 2011 through the end of the year. This is why it is important to keep a daily mileage log on your driving for business use. This is a relatively simple habit to get into and it makes your paperwork at tax time so much easier.
How do I keep a mileage log?
For a mileage log, simply put a notebook in your vehicle. Keep columns for date, odometer reading to start the day and end the day of business driving. Keep a total mileage column also which you can use to add it all up at the end of the year. This also allows for when the IRS allows different amounts for different times of the year. It is nice for keeping track of the total mileage on the car which the IRS also wants to know.
What mileage counts?
The easiest way I can explain it is any mileage that you are driving for your business that is not reimbursed or driven in a company provided vehicle. However, remember that commuting is NOT deductible mileage. If you live in Canton and drive to Akron, that is commuting and not deductible. If you then drive from Akron to the Youngstown office every day and back, this mileage IS deductible. Another common example is someone who is a visiting nurse. A wise nurse will, if possible schedule her 2 nearest visits (if she doesn't report to an office first and at the end of the day) first and last for the day. This is because the drive from her home to the first location is considered commuting mileage while the driving to all of the stops during the day are business miles. Then when she makes her last visit and drives home, that mileage is commuting and not deductible.
What about insurance and repairs, can't I claim those?
Yes, in certain circumstances you can claim insurance and repairs INSTEAD of mileage. Most preparers and taxpayers that have done the math have generally found that it is easier to prove and they generally get more deduction by claiming mileage. Assuming even $4 per gallon, your per mile cost for gas is 16 cents. Taking this out of the equation, that leaves 39.5 cents per mile to cover insurance and repairs. For every 1,000 miles, this leaves $395 of deduction to compare against all of the other costs such as repairs, tires and insurance. Assuming $600 for insurance, repairs of $2,000 and $500 for a new set of tires EVERY year, this comes to $3,100 of what most people could claim. This would come to 7,800 miles to cover those expenses. While there are years that you may make out on that, you are not permitted to switch back and forth on the methods of deducting your vehicle. If your vehicle requires that much cost every year, you should think about a different vehicle.
By the way, mileage for business use is different than mileage for charity which is 14 cents a mile and mileage for medical treatment or moving which is going up to 23.5 cents per mile starting July 1st from 19 cents per mile.
Thursday, June 23, 2011
Saturday, January 15, 2011
Where did the rapid refunds go, long time passing…
Where did the rapid refunds go, long time passing…
H&R Block Press Release dated December 24, 2010:
H&R Block says HSBC Terminates RAL Funding Pact. As a result of a regulatory directive by the Office of the Comptroller of the Currency (“OCC”), HSBC has given notice to H&R Block that it is immediately terminating the parties’ long-term contract under which HSBC provided all of H&R Block’s refund anticipation loans (“RALs”) and some of its refund anticipation checks (“RACs”). As a result, HSBC will no longer provide RALs or RACs to H&R Block clients.
Yes, rapid refunds are becoming a thing of the past. The Christmas Eve massacre cut off one of the big three at the last moment. But this is simply the latest blow in a year long campaign by the Obama administration through various agencies and a host of state attorneys general.
The biggest single blow came this off-season when the IRS announced it would not be providing the debt code indicator with its acknowledgements. The debt wachacallit, what is that? In the past, rapid refunds are actually bank loans that a tax customer paying a tax preparer would receive within 24 hours of filing a return. The loan would then be repaid when the IRS direct deposits the refund to the bank in 8 to 15 days. The tax preparer would do the return, get it signed by the taxpayer, then send it electronically to the IRS with a code sent to the bank. The IRS would then do an initial electronic evaluation of the return and send an acknowledgement that the return was accepted. Part of this acknowledgement was the debt code indicator. What this told the bank was whether a claim (ie, child support, student loans, unpaid taxes, etc) was filed against the tax refund of the taxpayer. This was obviously important information to the bank since it told the bank if this taxpayer was actually getting their refund. If not, 95% of the taxpayers applying for these loans can’t pay it back out of their own income.
The stated reason for this is that many of the providers in the industry would charge outrageous rates with APRs (annualized percentage rate) of 100-300%. I took severe issue with a local paper that printed this as gospel when “covering” the IRS funded “free clinics”. They really did a softball on them, accepted everything they said about the “bad, predator” professional tax return preparer. For my own business, I used Chase Bank. Chase capped its loans to an APR of 33%. Not bad considering a short loan period balloons the APR and many credit cards are in the 20-25% range. Also, since they were on Chase Bank checks, my clients could cash the checks for free instead of paying the real loan sharks, the payday advance places.
Ironically, I never made a lot off of the Rapid Refunds. Yes, truth be told my “take” was usually about 15-20 bucks. Considering my average return fee is about $100, not really a big deal. I only offered them because a threshold question is, “Do you offer Rapid Refunds?” A no answer and you get hung up on. But like it or not, they are a thing of the past. I will move on to other clients and survive. Darn, and I was just looking at that one house up in the Akron area built by that basketball player who moved to South Beach, what’s his name?
Another article regarding another Rapid Refund or Refund Anticipation Loan provider:
http://banktalk.org/2011/02/16/river-city-bank-drops-ral-program/
H&R Block Press Release dated December 24, 2010:
H&R Block says HSBC Terminates RAL Funding Pact. As a result of a regulatory directive by the Office of the Comptroller of the Currency (“OCC”), HSBC has given notice to H&R Block that it is immediately terminating the parties’ long-term contract under which HSBC provided all of H&R Block’s refund anticipation loans (“RALs”) and some of its refund anticipation checks (“RACs”). As a result, HSBC will no longer provide RALs or RACs to H&R Block clients.
Yes, rapid refunds are becoming a thing of the past. The Christmas Eve massacre cut off one of the big three at the last moment. But this is simply the latest blow in a year long campaign by the Obama administration through various agencies and a host of state attorneys general.
The biggest single blow came this off-season when the IRS announced it would not be providing the debt code indicator with its acknowledgements. The debt wachacallit, what is that? In the past, rapid refunds are actually bank loans that a tax customer paying a tax preparer would receive within 24 hours of filing a return. The loan would then be repaid when the IRS direct deposits the refund to the bank in 8 to 15 days. The tax preparer would do the return, get it signed by the taxpayer, then send it electronically to the IRS with a code sent to the bank. The IRS would then do an initial electronic evaluation of the return and send an acknowledgement that the return was accepted. Part of this acknowledgement was the debt code indicator. What this told the bank was whether a claim (ie, child support, student loans, unpaid taxes, etc) was filed against the tax refund of the taxpayer. This was obviously important information to the bank since it told the bank if this taxpayer was actually getting their refund. If not, 95% of the taxpayers applying for these loans can’t pay it back out of their own income.
The stated reason for this is that many of the providers in the industry would charge outrageous rates with APRs (annualized percentage rate) of 100-300%. I took severe issue with a local paper that printed this as gospel when “covering” the IRS funded “free clinics”. They really did a softball on them, accepted everything they said about the “bad, predator” professional tax return preparer. For my own business, I used Chase Bank. Chase capped its loans to an APR of 33%. Not bad considering a short loan period balloons the APR and many credit cards are in the 20-25% range. Also, since they were on Chase Bank checks, my clients could cash the checks for free instead of paying the real loan sharks, the payday advance places.
Ironically, I never made a lot off of the Rapid Refunds. Yes, truth be told my “take” was usually about 15-20 bucks. Considering my average return fee is about $100, not really a big deal. I only offered them because a threshold question is, “Do you offer Rapid Refunds?” A no answer and you get hung up on. But like it or not, they are a thing of the past. I will move on to other clients and survive. Darn, and I was just looking at that one house up in the Akron area built by that basketball player who moved to South Beach, what’s his name?
Another article regarding another Rapid Refund or Refund Anticipation Loan provider:
http://banktalk.org/2011/02/16/river-city-bank-drops-ral-program/
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