TaxBytes

Standard Mileage Rates for 2023 – Did You Know?

The IRS has updated the 2023 standard mileage rates for vehicle uses that qualify for a tax deduction. These rates apply for most passenger vehicles, including cars, vans, SUVs and pickup trucks.

- 65.5 cents per mile for business use of a vehicle (up 3 cents from midyear 2022)
- 22 cents per mile for certain medical purposes or moving purposes for qualified active-duty Armed Forces members (same as midyear 2022)
- 14 cents per mile for vehicle use for qualifying charitable work (unchanged)

In most cases, taxpayers who qualify to claim a vehicle expense deduction may either use the standard mileage rate or actual expenses to figure their deduction. However, if you use your car or truck for business, you generally must use the standard rate for the first year you put the vehicle in service if you want to preserve this option for future years.

A tax professional can help you determine whether the standard mileage rate or actual expenses will result in a larger deduction in your circumstances. Keep in mind that if you choose to deduct actual expenses, you will need to keep detailed records of all vehicle-related costs.

Spike in Tax-related Gift Card Scams – Did You Know?

The holiday season can bring a lot of joy, but unfortunately, it also brings a new wave of scammers trying to cheat people out of their hard-earned money. Many scammers impersonate the IRS or other government agencies and demand payment in gift cards.

In one common version of the scam, a caller posing as an IRS agent threatens a person with tax and/or criminal penalties if the person does not immediately pay off a fictitious tax debt. The scammer may also send threatening text, email or voice messages with a callback number. Ultimately, the scammer demands that the person make payment by purchasing gift cards and sharing the card numbers and PINs.

If you get a call or message from anyone demanding payment in gift cards, hang up or do not reply. The IRS will never call a taxpayer to demand payment in gift cards, prepaid debit cards or wire transfers. If you have legitimate concerns about your tax situation, including back taxes you may owe, a tax professional can help you handle the problem in a safe, secure way. To help protect others, you can report possible tax scams to [email protected].

Giving Tuesday and Charitable Donations - Did You Know?

Millions of Americans will contribute to their favorite charities on Giving Tuesday (November 29), and throughout the holiday season. Charitable donations are often described as tax-deductible, but whether you can claim a deduction for your contribution depends on several factors.

First, you generally must itemize deductions on your tax return to claim a deduction for charitable donations. Therefore, your donation will not be deductible if you use the standard deduction. Note that the special rules that allowed taxpayers who did not itemize to deduct certain monetary donations in 2020 and 2021 have now expired. A tax professional can help you determine whether itemizing deductions would be advantageous for you.

If you do itemize deductions, you may generally deduct donations of money or property to any eligible tax-exempt charity. If you are unsure whether an organization qualifies to receive tax-deductible donations, the IRS Tax-Exempt Organization Search tool (link below) can help.

Tax-Exempt Organization Search: https://www.irs.gov/charities-non-profits/tax-exempt-organization-search

Tax Considerations for People Changing Marital Status – Did You Know? (2/2)

A person is considered married for tax purposes if they are married on the last day of the year. Therefore, the IRS urges all taxpayers whose marital status changes during 2022 to consider several possible impacts on their taxes. In particular, for taxpayers who get married this year, or become divorced or legally separated, these issues may come into play:

UPDATING YOUR WITHHOLDING: Generally, if your marital status changes, you will need to file a new Form W-4 with your employer(s) so that your paycheck withholding may be adjusted accordingly. If you also have self-employment income or work multiple jobs, you may wish to use the IRS Withholding Estimator tool (link below) to check your withholding amounts. If you pay estimated taxes, you may need to adjust your payments based on your new marital status.

CHANGING FILING STATUS: If you are married as of December 31, 2022, you may select either Married Filing Jointly or Married Filing Separately status on your 2022 federal tax return. For many couples, joint filing may result in lower tax, but exceptions exist. If you are divorced or legally separated as of December 31, you may file under Single or, if you qualify, Head of Household status. Head of Household filers receive a larger standard deduction and other tax benefits.

A tax professional can help you sort out any tax issues related to your change in marital status, including choosing the most advantageous filing designation.

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator