June 2022 - Stees, Walker & Company, LLP Blog

Alert: IRS Increases Mileage Rate to 62.5 Cents Per Mile

By Office Staff|2022-06-30T11:30:14-07:00June 30, 2022|Categories: Mileage|Tags: Actual expenses method, Mileage Rate, Standard mileage method|0 Comments

Gas prices have risen, on average, about $2 per gallon since this time last year. In response, the Internal Revenue Service (IRS) has increased the standard mileage deduction for businesses 4 cents a mile starting July 1, 2022 — from 58.5 cents to 62.5 cents per mile.

Likewise, the new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022 — up 4 cents from the rate effective at the start of 2022. (The 14-cent per mile rate for charitable organizations remains unchanged because it’s set by statute.)

An increase of only 4 cents a mile might seem like a pittance, but when you do the math, it adds up. For example, if you drive a vehicle that gets 20 miles a gallon, 4 cents a mile results in a deduction of 80 cents per gallon.

Of course, that still doesn’t come close to covering the extra $2 per gallon you’re paying at the pump, not to mention all the other rising costs of owning and maintaining a vehicle for your business. You know, things like lease payments (or depreciation), license and registration, insurance, maintenance, and repairs.

Here’s a thought. Have you considered halting your habit of taking the easy way out (using the standard mileage deduction) and instead start keeping detailed records of all the actual costs of owning and operating the vehicle?

Understanding Your Options: Actual Expenses vs. Standard Mileage

That’s right. The IRS gives you two ways to calculate your business vehicle deduction: Continue reading…

Understanding the Tax Implications of NFTs – Nonfungible Tokens

By Office Staff|2022-06-16T12:14:52-07:00June 16, 2022|Categories: Taxes|Tags: Bitcoin, Blockchain, Cryptocurrency, Ethereum, NFT, Nonfungible Token, OpenSea|0 Comments

Just when you thought that the world of finances couldn’t possibly become any weirder or more complex, somebody comes up with a new idea to challenge our understanding.

When FDR started the process of taking the U.S. dollar off the gold standard in 1933 and Nixon completed the process in 1971, they were unaware of where technology would lead us decades later. They had no clue that they were essentially opening the Pandora’s box of alternative currencies — first with cryptocurrencies like Bitcoin and ETH, and now with Nonfungible Tokens (NFTs).

These and other digital currencies and assets are not only challenging traditional monetary policy across the globe but are also adding another layer of complexity to tax laws and their enforcement. While Bitcoin seeks to replace traditional currencies, some can argue that NFTs — which also rise and fall in value — are seeking to replace physical assets, and therefore are subject to income tax and capital gains taxes.

In this post, we take a deeper dive into what NFTs are and the tax implications surrounding their ownership and use.

What Are NFTs (Nonfungible Tokens)?

Stories about Nonfungible Tokens (NFTs) are everywhere in the news. But what exactly are they?

Nonfungible Tokens (NFTs) are digital assets that represent real-world items, from art and music to articles and sports trading cards. But these aren’t just copies of files found on the internet. NFTs are nonfungible, meaning they’re Continue reading…

4 Ways Businesses Can Save on Taxes in 2022

By Office Staff|2022-06-09T14:02:33-07:00June 9, 2022|Categories: Business Taxes|Tags: Bonus Depreciation, Business Meal Expenses, Employing Family Members, Section 179 Expense|0 Comments

Every cloud has a silver lining. That’s especially true of the clouds that gather around business owners near tax time (which happens to be all the time, by the way). The tax code is highly complex.

According to one estimate, the federal tax code — at a whopping 2,652 pages — is 187 times longer than it was a century ago. The silver lining to all this? Within that highly complex tax code are the keys to the kingdom: unlocking enormous tax savings.

This is especially true for businesses, because government organizations at the federal, state, and local levels all want to stimulate business development. They know their funding is tied directly to the profits and personal income that those businesses generate. And the primary way governments stimulate business is by offering tax breaks and incentives.

As a business owner, you can capitalize on those tax breaks by 1) knowing about them and 2) taking full advantage of them over the course of the tax year. That means not waiting until April 15 of the following year, when it may be too late.

In this post, we address four areas of focus for reducing your business taxes in the 2022 tax year. We also want you to consider asking your CPA or tax planning firm about scheduling a mid-year meeting for your business, because the steps you and your CPA take now will pay dividends in the Spring of 2023!

First up is a section of the tax code that allows you to deduct the cost of certain types of property as an expense, rather than requiring that the cost of the property to be capitalized and depreciated.

Section 179 Expense and Bonus Depreciation

The U.S. tax code provides different methods for writing off the cost of new or used machinery or equipment. Consider the following four options: Continue reading…

Want to Reduce Your Income Tax? Start Planning Now!

By Office Staff|2022-06-02T14:06:42-07:00June 2, 2022|Categories: Taxes|Tags: Bitcoin, Calculating Taxes, Capital Gains, Capital Losses, Cryptocurrency, Estimated Payments, Mid-Year Meeting, Net Investment Income Tax, Reverse Mortgage, Tax Planning, Tax Withholding, Virtual Currency|0 Comments

You probably just filed your 2021 tax return a month ago or so, and you’re ready to put taxes at the back of your mind for at least a few months. This may not be your best thinking because, if you want to pay less in 2022, now’s the time to start planning.

What you do from now until December 31 of this year, can have a significant impact on how much income tax you’ll owe, or the size of the refund you can expect to receive, next year. That’s why here at SWC, we’re encouraging our clients to schedule a Mid-Year Tax Planning Meeting as soon as possible.

In fact, tax planning is becoming increasingly important for two reasons:

First, thanks to inflation and other economic pressures, increases in income aren’t likely to keep pace with inflation. Saving on taxes may help alleviate some of that pain.
Second, if any pieces of current administration’s tax plan are implemented, tax rates for both individual and corporate taxpayers could increase. Having a tax plan in place to account for these potential increases and maximize the deductions and credits for which you qualify, may help to counter some of those increases.

As you prepare for your Mid-Year Meeting with us, we encourage you to start thinking about the various steps you can take now to avoid any nasty surprises next year, including: