Tax Changes and Updates


Getting Your Records Together
The key to being compliant and correctly taking all of the deductions that you are entitled to is to have your information organized and available for consideration for input onto your tax return.  Following are some recommendations for getting your  records pulled together.

 

IRS Hot Button Issues
IRS statistic:  61% of sole proprietors underreport net business income.
Revenue Ruling 56-407:  You must report all of your expenses.
Per the National Association of Enrolled Agents, the following are key audit categories:  gross receipts, costs of goods sold, auto expenses, supplies, meals & entertainment, rent, telephone and depreciation.

 

Payroll Tax Changes - History
Payroll taxes generally fall into two categories:  deductions from an employee's wages and taxes paid by the employer.

in 2012, Congress approved a payroll tax holiday in an effort to stimulate the economy.   The holiday reduced the amount paid by employees.    The amount withheld in paychecks for Social Security and Medicare was reduced from 6.2% to 4.2%.   The effect increased the amount of take home pay.   

The payroll tax holiday expired at the end of 2012 and rates, for both employees and employers, returned to 6.2%.        
 
In 2013, Congress approved additional and new Medicare taxes as part of the Affordable Care Act.   The changes affect individuals with higher incomes, as follows:

1)  a new 0.9% rate was applied on wages in excess of $200,000, and

2) a new 3.8% rate was applied on unearned income above $200,000.  Unearned income is defined as earnings from passive investments, annuities, rental properties, etc.  

 

Mileage Rates - 2017/2016
Here are the standard mileage rates for business use of your car.
2017 = 53.5 cents per mile
2016 = 54.0 cents per mile