2013 IRS Inflation Adjustments – Tax Benefits and Pension Plan Limitations

While much is uncertain about what taxes will look like for 2013, at least we have a small measure of certainty with a few items. On Thursday, Oct. 18th, 2012, the IRS released IR-2012-77 and IR-2012-78, which contained a number of increased limits and benefits. Here are the main highlights:

  • Annual exclusion for gifts increases to $14,000 for 2013, up from $13,000 for 2012.
  • The 401k elective deferral limit for employees increases from $17,000 for 2012 to $17,500 for 2013. This also applies to 403(b), most 457 plans, and the federal Thift Savings Plan. The corresponding catch-up contribution for employees age 50 and over remains unchanged at $5,500.
  • If your 401k plan has profit sharing, the maximum employer contribution increases from $33,000 in 2012 to $33,500 for 2013.  This increases the maximum defined contribution limit to $51,000.
  • The SIMPLE IRA contribution limit increases to $12,000 in 2013, up from $11,500 in 2012. Like with the 401k, the catch-up contribution limit for SIMPLE plans remains unchanged at $2,500.

2010 Standard Mileage Rates

Usually I post the new mileage rates as soon as the IRS the comes down from the mountain with the latest tablets; however, this year it was not all that exciting as we have a decrease as compared to prior years.  Here they are:

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 50 cents per mile for business miles driven
  • 16.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

Source: IRS – IR-2009-111, Dec. 3, 2009

Remember, you need to keep a contemporaneous record or log of your mileage.  If you tech saavy, there are several apps for that (like Milebug), which will (hopefully) make it easier for you.

Also, even if you are depreciating your business vehicle, you need to keep a log to prove the percentage of business usage you are using.  This is not as much an issue with large specialty vans & trucks, but with passenger vehicles it is very important.

Finally, make sure you understand the rules on a qualifying home office and commuting miles so that you can maximize your business miles.

Making Work Pay Credit & New Withholding Tables

If you are a small employer that calculates your payroll manually – please be advised that new withholding tables have been released and any payroll on or after today, April 1st, 2009, have to be calculated using the new tables.

Withholding Tables

IRS IR-2009-13 – Information on the change

For those of you who use QuickBooks, be sure you download the latest update and that your subscription is current.  You will not really notice much a change in preparing the payroll, but you can be sure your employees will start asking questions as it is all of the news today.

For those of you that are married with a double income and adjusted gross income of more than $150k – this could actually reduce your withholding in certain circumstances.  More to come on this as it develops.  The timing of this is horrible for CPAs!  We are in the final leg of long hours changes to payroll preparation is the last thing we want to deal with.

By the way, this is not an April Fools joke.  I only wish this whole “stimulus” bill was only a joke.

2009 Standard Mileage Rates

Last Monday, while everyone was getting ready for the holiday, the IRS came down from the mountain and with their tablets laying forth the 2009 standard mileage rates.  As always, they still remain below actual average costs per mile; however, the IRS has spoken and here they are…

  • 55 cents per mile for business miles driven;
  • 24 cents per mile driven for medical or moving purposes; and
  • 14 cents per mile driven in service of charitable organizations

For More information:
IR-2008-131
Rev Proc 2008-72

IRS Releases Mileage Rates

Tuesday the IRS released the 2008 mileage rates. They still remain far from actual costs per mile; however, the IRS has spoken and here they are…

  • 50.5 cents per mile for business miles driven;
  • 19 cents per mile driven for medical or moving purposes; and
  • 14 cents per mile driven in service of charitable organizations

For More information:
IR-2007-192
Revenue Procedure 2007-70