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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

Are you a CPA?

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Are you a CPA?

Is this you?

  • The person who wishes to be a master of their fate?
  • Who is willing to accept that to make more than a salary, one must accept risk?
  • Who has a vision for the future and wants to have

influence in making that vision a reality?

  • Who wants to lead and not follow?
  • Who wants to become part of a collaborative team

of motivated professionals?

We are looking for CPA‘s for the Associate / Partner Tax level positions. CPA license required.

  • CPA Associate – assist CPA Partner and prep client engagements (min. 2 years experience).
  • CPA Partner – oversee client engagements. Must use CPA Associate for prep work on engagements. (min. 5-8 years experience).

Any Candidate: Must have a minimum of 2 years experience tax business and individual. Trust and Nonprofit tax experience preferred.

Skills test(s) included in interview process.

Compensation DOE Starting +$50/hour.

Right candidate will be a self starter, team player and add-value.

COVID-19 considerations:

  • All customers required to wear face coverings.
  • All common areas cleaned and disinfected per CDC covid-safe workplace regulations.

COVID-19 precautions

  • Remote interview process
  • Personal protective equipment provided or required
  • Plastic shield at work stations
  • Temperature screenings
  • Social distancing guidelines in place
  • Virtual meetings
  • Sanitizing, disinfecting, or cleaning procedures in place

All customers required to wear face coverings. All common areas cleaned and disinfected per CDC covid-safe workplace regulations.

PPP Loans Open January 11th

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PPP loans re-opening and important California deadlines approaching

We have received many questions regarding new PPP loans and the California grant deadline. Both are addressed below.

PPP loans

The SBA has announced that the Paycheck Protection Program (PPP) will reopen the week of January 11.

When the program reopens, the following new PPP funds will be available to borrowers:

  • New “second draw PPP loans” for smaller businesses who have experienced a 25% decline in gross receipts; and
  • Supplemental funding for:
    • Original PPP loans where the loan amount would have changed due to new rules that have been released; or
    • Businesses that did not originally apply for first draw PPP loans.

Only community financial institutions will be able to accept first draw PPP loan applications on Monday, January 11, and second draw PPP loan applications on Wednesday, January 13. The PPP program will then open to all other participating lenders shortly thereafter.

The SBA also released new interim final rules that implement the new loans and answer some questions, including the following:

  • For the 25% decrease in gross receipts for second draw loans, the Consolidated Appropriations Act of 2021 states that they must show a decrease for a quarter in 2020 compared to a quarter in 2019. However, the interim final rules also say that businesses can compare calendar year 2019 to calendar year 2020 to show the 25% decrease;
  • First draw PPP loans will not be included in the gross receipts calculation for second draw loans;
  • In addition to showing that they have used, or will use, all of their first draw loan, second draw borrowers must have spent the full amount of the first draw loan on eligible expenses under the PPP rules to be eligible for a second draw loan. This means borrowers requesting second draw loans should prepare forgiveness applications for their first draw loans, because they are likely to be requested by the bank;
  • EIDL grants no longer reduce PPP forgiveness. Borrowers who previously had their PPP forgiveness reduced by the amount of the EIDL advance should contact their lender;
  • Borrowers in bankruptcy may not receive additional PPP funds; and
  • Businesses that have temporarily closed may still apply for PPP loans to help them reopen.

The interim final rules on first draw PPP loans can be found here:

www.sba.gov/document/policy-guidance-ifr-paycheck-protection-program-ppp-amended-economic-aid-act

The interim final rules on second draw PPP loans can be found here:

www.sba.gov/document/policy-guidance-ifr-paycheck-protection-program-ppp-second-draw-loans

California deadlines approaching

  • The deadline to apply for a California Relief Grant of up to $25,000 has been extended until Wednesday, January 15, 2021. Details on this program can be found at: https://careliefgrant.com/
  • The deadline to reserve the California Main Street Small Business Credit is Friday, January 15, 2021. Businesses that are currently closed may still apply if they had more full-time equivalent employees in July through November of 2020 than they did during the second quarter of 2020. Details on this program can be found at: https://cdtfa.ca.gov/taxes-and-fees/SB1447-tax-credit.htm

Please reach out with any questions about this article or to talk to one our CPA’s regarding your taxes.

info@mrarrachecpa.com

Merry Christmas For Sales Tax in California

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Merry Christmas for Sales Tax in California, Covid Style.

CDTFA Announced that Returns due between December 15, 2020, and April 30, 2021, for all but the largest taxpayers, will be extended.

Santa Claus’s CPA is coming to town 🎅

Taxpayers reporting less than $1 million in tax on a return originally due during this time frame are not required to seek an extension from CDTFA; relief will be provided automatically. 

Additionally, for these taxpayers, interest and penalties will not accrue on return amounts due, provided payments are made and returns are filed within three months of the original due date.

In recent press conferences and public announcements, for the first time EVER, the CDTFA is telling taxpayers to use sales tax money for necessary business operating expenses during this state of emergency.

This is dangerous for taxpayers who are not good with managing cash flow.

I strongly advise you to monitor and project your cash flow and PLEASE remember that the TAX is STILL DUE so make sure you communicate with the CDTFA immediately if you are in financial hardship.

You can read the full announcement at the following link.

https://www.cdtfa.ca.gov/services/covid19.htm

Reach out if you have any questions or want to talk more about this article or your business.

info@mrarrachecpa.com

My Notes On 2021 Economic Forecast presented by Chapman University

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I recently attended an Economic Forecast presented by Chapman University via live webinar and here are my notes.

You can view a recording of the presentation here https://economicforecast.chapman.edu/2020-presentation/

  • General Notes
    • Presenters included James Dotti and Fadel Lawandy
    • The Chapman economic forecast has historically been one of the most accurate predictors of economic performance for over 30 years
    • James Dotti and his team have successfully predicted 17 of the last 18 presidential elections.
  • What happened in 2020?
    • Predicted a mild decrease in GDP growth(+2%), but COVID happened and annual GDP decreased by a large amount (-3%.)
    • Government Officials at State Level made exaggeration of an ermergency and unnecessarily shut down the economy
    • Covid Shutdown Cost: California shut down mandate causes loss of 500,000 jobs and countless businesses
    • Covid Shutdown Benefit: California shut down mandate saves 6,600 lives…
    • States with less stringent shut down mandates saw less job loss and stronger economic revovery
  • 2021 is going to be volatile with opportunities for buy in the short-term dips but expect long-term growth.
    • Growing Pent up demand – personal wealth dramatically increased in 2020 by 10%.
    • Housing affordability is at a recent all time high with historic low interest rates. Recent GDP recovery was driven primarily by consumer spending, not housing which is not necessarily good news. Watch housing market closely in 2021
    • Stock Market performance is based on how the economy is predicted to perform. Currently predicted at modest +/- 3% growth. Historically, Dem Pres, Rep Senate and Dem House produce the best results for the market +/- 16%. IF Dems control all 3, then historically market +/- 6%.
    • Government spending good for economy and will drive inflation which is good in short term but overall will cause problem down the road. Due to the coronavirus pandemic, Congress and President Trump enacted the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) on March 18, 2020. The Committee for a Responsible Federal Budget estimated that the budget deficit for fiscal year 2020 would increase to a record $3.8 trillion, or 18.7% GDP.[5] The CBO preliminary estimate for the fiscal year 2020 deficit is $3.1 trillion or 15.2% GDP, the largest since 1945 relative to the size of the economy.[6]
    • Remote life will change the structure of work life, more comparable to women in the workplace during World War II.
    • Expect a lot of commercial real estate properties to change purpose or be elimated all together such as Hotels, Retail, Office Buildings, etc. Estimated 20% of NYC Hotels and Retail will close forever.
  • Innovation regions are a major focus for real estate investors because high paying jobs create local wealth and investment opportunities.
    • Phoenix, Carlsbad, Reno and Salt Lake City are areas of interest for innovation hubs with real estate and tax advantage opportunities.
    • Orange County needs to create more high-paying tech jobs to replace the Hospitality/Leisure employment loss to remove two-tier society.
    • Artificial Inteligence will create a lot high-paying tech jobs.

Thank you to Chapman University, speakers and sponsors for an amazing 2021 economic forecast. Some great takeaways including my favorite Real Estate tip – buy where the son goes in the winter.

Until next year, thank you and take care.

Contact our CPA today if you any questions about this article or want to talk more about your business or taxes.

Info@mrarrachecpa.com

Taxes Next Week, Next Month and Next Year

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2021 is coming, dun dun dun….

For some people that is good news, for some people that is like 4 more years of covid.

Here’s some tax buzz to look out for in the coming weeks, months, years.

Read more

Are you counting your AIC hours right? This applies to anyone who sits more than 1 hour a day.

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As CPA’s we are trained to count everything – we count time, money, frowns, widgets and woowoo’s and then bill it. But one thing we rarely count are AIC hours; time spent sitting at a desk is jokingly coined Ass In Chair “AIC” hours.

I may lose a few readers here, but the focus of this article is not counting AIC hours for billing purposes….

The focus of this article is…sitting.

Im not a medical Dr. (Sorry mom) but in some medical circles, there is data-driven-chatter that “sitting is the new smoking”. I didn’t pen the phrase, but thank you if you read it here first.

There are a slew of health issues related to sitting at a desk and most remedies focus on the chair or the desk and those are all very important. However, one simple solution rarely seen in the US work place has produced great result. I’m calling it “Stand Up”.

Let me explain Stand Up.

Read more

Ready to Start Your Business ?

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Are you ready to start your business? Make sure you meet with your CPA and Legal Advisors to CYA.

Starting a new business requires a lot of administrative planning and action on top of the already daunting task of working in your business. I like to call this Working On Your Business.

Here is a condensed list of some important things to consider when you are starting your business:

  • Finalize and Approve Business Organization Documents (i.e. By-Laws, partnership agreements, shareholder agreements, business plans and projections, etc.)
  • Register the business with the State (Corp/LLC/Partnership) and/or County (Sole Prop “FBN”)
  • Register with any applicable Licensing Authorities (i.e. Medical board, State Bar, DOT, etc.)
  • Obtain Federal EIN from the IRS
  • Apply for Business License ( city, etc)
  • Setup a system for Tax & Accounting Information, Controls and Procedures
  • Open a bank checking account
  • Bind insurance coverage needs (i.e. General Liability, E&O, Workers Comp, Health, etc.)
  • Setup Human Resources & Payroll

Starting a business is tough. We’re here to help you along the way.

Want to talk more or have questions about your business? Talk with a CPA now 949-877-3143 or email info@mrarrachecpa.com