News You Can Use: February 2019

News You Can Use: February 2019

1Many more vehicles will qualify for cents per mile method: If you were incorporated and reimbursed for your vehicle usage, you company could only reimburse you using the 54.5¢ per mile method if the vehicle was worth under $20,000. Now, this has been increased by $30,000. Thus, if your company purchases a $46,000 BMW for your use, your company gets a full write off of the vehicle as if it were used $100% for business, and you only get taxed on the business use at the current 58¢ per mile. This isn’t a bad deal. Alternatively, if you want your company to reimburse you for business use of vehicles that you own personally, you can have them do that at 58¢ per mile.

2Don’t help anyone evade taxes: In a recent case a son had to pay restitution of taxes owed by the father because he helped his father evade taxes. The fact that he wasn’t the person responsible for the taxes was irrelevant. 

3Some state returns will be more complicated than ever: The reason is that some states don’t follow the new tax law or follow certain parts of it. Example, you can no longer deduct miscellaneous itemized deduction on your federal tax return. However, some states such as California, New York, Hawaii, Iowa and Minn still allow it. The federal moving expense deduction is gone but some states still allow it. States also have different standard deductions, exemptions etc. 

Bottom line: Before you decide to prepare your own tax return, you will have to consider the complications of preparing a state return too.

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