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IRS 2023 Mileage rates

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Per IR-2022-234, December 29, 2022

WASHINGTON — The Internal Revenue Service today issued the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

The standard mileage rate for business use 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.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 2023-03PDF contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

IRS issues new guidance ahead of the upcoming 2023 tax season expected to start January 23, 2023.

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Important Reminders:

  • Have all your tax information organized BEFORE you go to file your tax return
  • File a complete and accurate tax return to avoid unnecessary delays and/or penalties. Especially if you received 1099’s or Advance Payment of Credits
  • File electronically and or use direct deposit to speed up your refund. Most refunds will be issued in less than 21 days
  • Dont rush – make sure you don’t overlook eligible Deduction or Credits
  • Low-income or Elderly taxpayers can file for free with  Volunteer Income Tax Assistance and Tax Counseling for the Elderly or  Free File 
  • The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia’s Emancipation Day holiday, which falls on Monday, April 17. Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.
  • Most income is taxable unless you provided basis, deductions, exemptions, etc

Key filing season dates (individuals)

There are several important dates taxpayers should keep in mind for this year’s filing season:

  • January 13: IRS Free File opens
  • January 17: Due date for tax year 2022 fourth quarter estimated tax payment.
  • January 23: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns.
  • January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
  • April 18: National due date to file a 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.
  • October 16: Due date to file for those requesting an extension on their 2022 tax returns.

You can read the full IRS press release here

California Health Department Reopening Guidelines For Restaurants, Retail and Manufacturing

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While a lot of business owners are taking a wait-and-see approach, The California Department of Public Health and Department of Industrial Relations recently released industry specific guidance to help employers reopeing their businesses during the Covid-19 pandemic.

These new instructional documents provide businesses with some important information from employee training to customer safety and other tips for a safe workplace. You can view these documents and other employer resources at the California state government’s website https://covid19.ca.gov/

Here are some notable parts from the government guidance if you are planning on curbside service, take-out or dining-in at your local Restaurant or Bar:

  • Prioritize outdoor seating and curbside pickup to minimize cross flow of customers in enclosed environments. Restaurants can expand their outdoor seating, and alcohol offerings. Guests are encouraged to order ahead of their arrival, even if dinining-in.
  • Limit the number of patrons at a single table to a household unit or patrons who have asked to be seated together. People in the same party seated at the same table do not have to be six feet apart. All members of the party must be present before seating and hosts must bring the entire party to the table at one time.
  • Licensed restaurants may sell “to-go” alcoholic beverages, prepared drinks, and pre-mixed cocktails provided they are sold and delivered to customers in conjunction with the sale and delivery of a meal/meals.
  • Discontinued tableside food preparation and presentation such as food item selection carts and conveyor belts, guacamole preparation, etc.

If you have questions about this article or want to talk more your business, please contact us at (949) 877-3143 (local) or (800) 425-0570 (toll free) or info@mrarrachecpa.com

Quicklinks to the Documents

guidance-dine-in-restaurantsDownload
guidance-retailDownload
guidance-manufacturingDownload

California Franchise Tax Board answers important questions related to Recent Federal COVID-19 Response

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The FTB has posted the following new FAQs about conformity to various portions of the CARES Act:

Q: Are the payments that individuals receive from the federal government (i.e., $1,200 [$2,400 for individuals filing a joint return] and $500 per qualifying child) under the recently enacted federal CARES Act subject to California income tax?

A: No, these payments are not subject to California income tax.

Q: Is the emergency increase in unemployment compensation benefits (in the amount of $600 per week) that individuals receive under the recently enacted federal CARES Act subject to California income tax?

A: No, these payments are not subject to California income tax.

Q: Are the modifications for net operating losses (NOLs) in the recently enacted federal CARES Act applicable for California income and franchise tax purposes?

A: No, these modifications for NOLs do not apply for California income and franchise tax purposes.

Q: Does California conform to the federal early withdrawal penalty waivers for distributions from qualified retirement accounts under the recently enacted federal CARES Act?

A: Yes, the federal early withdrawal penalty waivers for distributions from qualified retirement accounts under the federal CARES Act also applies for California income tax purposes.

The FTB’s COVID-19 FAQs can be found at:

www.ftb.ca.gov/about-ftb/newsroom/covid-19/help-with-covid-19.html

Income Taxes And Your Social Security Benefit

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Tax Season Is Coming

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California Appellate Court Rules Against FTB in Swart Case

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Swart case could be a small but notable victory for out-of-state ownership of a California LLC.

Currently, California’s franchise tax is imposed on the net income of every corporation “doing business within the limits of this state.” (§ 23151, subd. (a).) For tax years prior to January 1, 2011, section 23101 defined “doing business” as “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.” 2 (Former § 23101, now § 23101, subd. (a).) The term “actively” is the opposite of “passively” or “inactively” and means “active transaction for pecuniary gain or profit.” (Golden State Theatre & Realty Corp. v. Johnson (1943) 21 Cal.2d 493, 496 (Golden State Theatre); Hise v. McColgan (1944) 24 Cal.2d 147, 151.)

In this case, the $800 minimum franchise tax was imposed upon Swart several years after Swart made its investment and became a member of Cypress LLC. Swart argued that it was not doing business in California and that it passively held onto its investment in the tax year the franchise tax was imposed.

The Franchise Tax Board (FTB) demanded that Swart file a California corporate franchise tax return for the tax year ending June 30, 2010, and pay the $800 minimum franchise tax due on that return. Swart paid the tax, which amounted to $1,106 with penalties and interest, but contested it and requested a refund.

Swart claimed it was not subject to the franchise tax because it held no other investments in California, it did not otherwise do business in California, and it was only a passive member in Cypress LLC. Swart further claimed imposition of the franchise tax violated the due process clause and commerce clause of the United States Constitution. The FTB denied Swart’s request for refund.

Swart timely filed a complaint seeking a tax refund and declaratory relief. After briefing and argument on the parties’ cross-motions for summary judgment, the trial court entered an order granting Swart’s motion for summary judgment and denying the FTB’s motion for summary judgment. Swart was awarded a refund in the amount of $1,106.71.

 

Read court document here http://www.courts.ca.gov/opinions/documents/F070922.PDF

Too many tax clients? Want to sell your tax practice?

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Too many tax clients? Want to sell your tax practice? If yes, then I would like to extend to you an invitation to our practitioner network for tax client referrals & tax practice acquisitions – we offer a “dollar per client” or “% of fee”. We have had tremendous success growing organically, but we always enjoy and look forward to working with local tax preparers if for nothing else than to get tax practice tips. To discuss more, you can reach me at (949) 877-3143 or by email at MRarrache@MrSmartTax.com

Thank you.

 

Sincerely,

Michael R. Arrache, CPA, EA

Owner – Mr. Smart Tax, Inc.

Economic Troubles Ahead? Clean Up, Save Up, Understand & Review

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Whether you prefer hands on investing or hiring wealth managers, start saving money and protect your portfolio. Healthy cash reserves cover 12-24 months of living expenses, but 6 month reserves is a great start. Most importantly keep an eye on your investments and make smart moves with your money.

John Riley, AIF from Cornerstone Investment Services is worried about the economy. In his recent article published June 2016, he discusses 4 charts that indicate negative economic trends and 4 helpful tips to protect your portfolio .

Ultimately the key to fortifying your financial position is to clean up, save up, understand & review – Mr. Smart Tax, Inc. is here to help. Schedule your free initial consultation today!

(800)-425-0570 or email us at contact@MrSmartTax.com

Read full article by John Riley here…

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