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Here we are, fresh into the new year and into a new tax season which, we hope, will be fruitful and smoothly going for all of you.
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As a matter of fact, just a couple of days before 2014 expired, the IRS announced that they will begin accepting tax returns electronically on January 20th. Paper tax returns will begin processing at the same time.
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The decision follows Congress renewing a number of "extender" provisions of the tax law that expired at the end of 2013. These provisions were renewed by Congress through the end of 2014. The final legislation was signed into law Dec 19, 2014.
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"We have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems," said IRS Commissioner John Koskinen.
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"Our employees will continue an aggressive schedule of testing and preparation of our systems during the next month to complete the final stages needed for the 2015 tax season."
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- The IRS reminds taxpayers that filing electronically is the most accurate way to file a tax return and the fastest way to get a refund. There is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin.
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More news worth mentioning refer to the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
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Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
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- 57.5 cents per mile for business miles driven, up from 56 cents in 2014;
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- 23 cents per mile driven for medical or moving purposes, down half a cent from 2014 ;
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- 14 cents per mile driven in service of charitable organizations.
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| The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law. |
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| You, of course, always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates. |
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Remember that you may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously).
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| The IRS also announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2015. Interest is typically added to any unpaid tax from the time that the payment of tax was due until the date the tax is paid. Interest rates are set by the IRS every three months. The rates will be: |
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- 3% for overpayments (2% in the case of a corporation);
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- 5% for large corporate underpayments; and
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- 0.5% for the portion of a corporate overpayment exceeding $10,000.
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For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3% points.
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Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3% points and the overpayment rate is the federal short-term rate plus 2% points. The rate for large corporate underpayments is the federal short-term rate plus 5% points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point.
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Also, the IRS has released the 1040 Form for year 2014 as well as the Instructions for the form. These are of interest especially for the newly added Line 61 which refers to Health care individual responsibility. You must either:
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Indicate on line 61 that you, your spouse (if filing jointly), and your dependents had health care coverage throughout 2014,
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Claim an exemption from the health care coverage requirement for some or all of 2014 and attach Form 8965, or
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Make a shared responsibility payment if, for any month in 2014, you, your spouse (if filing jointly), or your dependents did not have coverage and do not qualify for a coverage exemption. |
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| We have already informed you about different inflation adjustments to tax benefits for 2015 in a previous newsletter. |
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| We also promise to keep you up to date with any news that may be of interest to you. And, as always, we urge you to enroll help from a tax professional in all your dealings with the IRS. |
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