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2024 IRS Standard Mileage Rates | IRS Tax Lawyer & Attorney

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Beginning January 1, 2024, the IRS changed the optional standard mileage for the calculation of deductible costs of operating an automobile (sedans, vans, pickups and panel trucks) for business, charitable, medical or moving purposes. Let’s discuss in more detail these new 2024 IRS Standard Mileage Rates.

2024 IRS Standard Mileage Rates for Business Usage

For the tax year 2024, the business-use cost of operating a vehicle will be 67 cents per mile. This is 1.5 cents higher than in 2023. The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile.

As in previous years, a taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

2024 IRS Standard Mileage Rates for Medical and Moving Purposes

For the tax year 2024, the medical and moving cost of operating a vehicle will be 21 cents per mile. This is lower by one cent from 2023. The rate for medical and moving purposes is based on the variable costs.

2024 IRS Standard Mileage Rates for Charitable Purposes

For the tax year 2024, the costs of operating a vehicle in the service of charitable organizations will be 14 cents per mile. The charitable rate is set by statute and remains unchanged.

2024 IRS Standard Mileage Rates vs. Actual Costs vs. Miscellaneous Itemized Deductions

It is important to note that under the Tax Cuts and Jobs Act, taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. With the exception of active duty members of Armed Forces, taxpayers also cannot claim a deduction for moving expenses. Notice-2019-02.

However, taxpayers are not forced to use the standard mileage rates; rather, this is optional. Sherayzen Law Office advises taxpayers that they have the option of calculating the actual costs of using a vehicle rather than using the standard mileage rates. If the actual-cost method is chosen, then all of the actual expenses associated with the business use of a vehicle can be used: lease payments, maintenance and repairs, tires, gasoline (including all taxes), oil, insurance, et cetera.

IRS Notice 2024-08

IRS Notice 2024-08, posted on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan. In addition, for employer-provided vehicles, the Notice provides the maximum fair market value of automobiles first made available to employees for personal use in calendar year 2024 for which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) or the vehicle cents-per-mile valuation rule in § 1.61-21(e).

2018 Individual Tax Rates | International Tax Lawyer & Attorney

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The Tax Cuts and Jobs Act of 2017 modified the tax brackets that existed in tax year 2017. In this short essay, I will discuss the new 2018 individual tax rates.

2018 Individual Tax Rates: Historical Background

Tax rates seem to change every time there is a new President. For example, when President Bush got elected in 2000, the Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001 creating a new tax bracket and bringing the rest of the tax rates down; the top rate was gradually reduced to 35% from 39.6%.

Then, under the new administration of President Obama, the American Taxpayer Relief Act of 2012 increased the tax rates again with the top rate going back up to 39.6%.

2018 Individual Tax Rates: 2017 Tax Reform

Under President Trump, the Congress passed a major reform of the US tax system through the Tax Cuts and Jobs Act of 2017. The tax rates were among the most important changes with respect to domestic US tax law.

While the tax reform preserves the same seven tax brackets for individual tax payers, it introduces new 2018 individual tax rates for almost each of them. Under the previous law, the tax brackets were 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. Now, the new rates starting tax year 2018 are much lower: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

It is important to emphasize that these are not permanent changes. The new tax brackets will operate only through tax year 2025; starting January 1, 2026, the tax rates will return to those that existed in 2017.

2018 Individual Tax Rates: Income Thresholds for Tax Brackets Increase

In addition to lower tax rates, the 2017 tax reform also restructured the income thresholds that apply to most tax brackets. Generally, the income thresholds went up.

For example, in order to be subject to 39.6% tax in 2017, taxpayers filing a joint tax return must have had income in excess of $470,700. In 2018, in order to be subject to the top bracket’s tax rate of 37%, the same couple will have to have income in excess $600,000. The income of $470,700 would only trigger the 35% tax rate in 2018.

Sherayzen Law Office has long held the view that the increase in the income thresholds for tax brackets is especially important (perhaps, more so than the decrease in tax rates) to alleviate the tax burden of the middle class. However, we do note with alarm that the benefits might have been spread too widely to include the top 1% of the earners while the 10% bracket was kept essentially the same. We believe that this was one of the reasons why the Congress made the increase in income thresholds for tax brackets a temporary one despite the anticipated inflation pressures in the future.

Home Equity Tax Deduction Eliminated in 2018 | Tax Lawyers News

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The Home Equity Tax Deduction used to be one of the most common deductions used by US taxpayers. The Tax Cuts and Jobs Act of 2017 eliminated this deduction. Let’s take a brief look at the Home Equity Tax Deduction and what its elimination may mean for your US tax return.

Home Equity Tax Deduction: What are Home Equity Loans and Home Equity Lines of Credit?

A Home Equity Loan is a loan which uses the borrower’s equity in his home as a collateral for the loan.

A Home Equity Line of Credit or HELOC is a loan in which a lender agrees to lend a certain amount of funds to the borrower who uses his equity in his home as a collateral. HELOC is different from a conventional home equity loan because the borrower does not receive the entire amount of the credit up front, but uses a line of credit to borrow funds as needed (but not to exceed the credit limit). HELOC is very similar to a credit card, but it is backed-up by the borrower’s real estate.

Home Equity Tax Deduction as of 2017

Prior to the Tax Cuts and Jobs Act of 2017, homeowners who took out home equity loans could deduct from their adjusted gross income (on Schedule A) the interest on a Home Equity Loan or HELOC up to $100,000. This was called the Home Equity Tax Deduction.

Home Equity Tax Deduction Eliminated Starting Tax Year 2018

As a result of the 2017 tax reform (the Tax Cuts and Jobs Act of 2017), the Home Equity Tax Deduction was completely eliminated. In fact, the deduction was eliminated for both, new and existing borrowers (unlike the home mortgage deduction).

Home Equity Tax Deduction Elimination May Impact 2018 Individual Tax Returns

While the precise tax impact of the elimination of the Home Equity Tax Deduction may vary based on your precise tax situation, it can be reasonably supposed that the end of this deduction may result in a larger amount of taxpayers taking standard deduction rather than trying to itemize their deductions. This will be especially true since, in 2018, the standard deduction will double in size.

First Quarter 2018 IRS Underpayment Interest Rates | Tax Lawyer MN

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On December 5, 2017, the IRS announced that the First Quarter 2018 IRS underpayment interest rates and overpayment interest rates will remain the same as they were in the last quarter of 2017. This means that, the First Quarter 2018 IRS underpayment interest rates and overpayment interest rates will be as follows: On December 5, 2017, the IRS announced that the First Quarter 2018 IRS underpayment interest rates and overpayment interest rates will remain the same as they were in the last quarter of 2017. This means that, the First Quarter 2018 IRS underpayment interest rates and overpayment interest rates will be as follows:

four (4) percent for overpayments (three (3) percent in the case of a corporation);
four (4) percent for overpayments (three (3) percent in the case of a corporation);
four (4) percent for underpayments; six (6) percent for large corporate underpayments; and one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.

The Internal Revenue Code requires that the rate of interest be determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The First Quarter 2018 IRS underpayment interest rates and overpayment interest rates were computed based on the federal short-term rate determined during October of 2017 to take effect on November 1, 2017, based on daily compounding.

There are two principal applications for the First Quarter 2018 IRS underpayment interest rates in the context of US international tax law. First, the First Quarter 2018 IRS underpayment interest rates are used to calculate interest on the additional tax liability that has arisen as a result of filing amended federal tax returns.  This is also true with respect to tax returns that are amended as part of the OVDP or the Streamlined Domestic Offshore Procedures voluntary disclosure package.

Second, the First Quarter 2018 IRS underpayment interest rates are relevant to calculation of a PFIC (Passive Foreign Investment Company) interest on PFIC tax imposed on “excess distribution” under the default IRC Section 1291 PFIC calculation method.

2013 Minnesota Income Tax Rates

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Below, I list the information provided by the Minnesota Department of Revenue with respect to 2013 Minnesota Income Tax Rates. Notice, the new 9.85% tax bracket that was created last year and introduced a radical new change to 2013 Minnesota Income Tax Rates. Taxpayers who file estimated taxes may use this information to plan and pay taxes beginning in April 2013.

Single

For income between $ 0- 24,270: 5.35%
For income between $ 24,271-79,730: 7.05%
For income between $ 79,731-150,000: $7.85%
For income $150,001 and above: 9.85%

Married Filing Jointly

For income between $ 0-35,480: 5.35%
For income between $35,481-140,960: 7.05%
For income between $140,961-250,000: 7.85%
For income $250,000 and above: 9.85%

Married Filing Separately

For income between $ 0-17,140: 5.35%
For income between $17,741-70,480: 7.05%
For income between $ 70,481-125,000: $7.85%
For income $125,001 and above: 9.85%

Head of Household

For income between $ 0- 29,880: 5.35%
For income between $ 29,881- 120,070: 7.05%
For income between $ 120,071- 200,000: $7.85%
For income $200,001 and above: 9.85%