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2012 Tax Brackets

The IRS gives us a sneak peak of new federal income tax brackets for the year 2012

Fall is an exciting time of year for the tax obsessed because we get our first glimpse at the 2012 tax brackets! That’s right – it’s not even time to file our 2011 taxes and already we get a sneak peak of what lies beyond.

Last year the unveiling of the federal income tax brackets was a bit more exciting because of the raging Congressional battle over the extension of the Bush tax cuts. As late as December, it was still unclear what the brackets and rates would look like for 2011.

This year, on the other hand, it’s been pretty standard, even if the expiration of the cuts in 2012 promises some tax fireworks next year. Continue reading “2012 Tax Brackets”

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IRS Increases Mileage Rates

As of June 23rd, 2008, the IRS has increased the optional standard mileage reimbursement rate by 8 cents which is in effect for the last 6 months of tax year 2008 (July 1—December 31). For any business miles driven from January 1st through June 30th, the rate stands as 50.5 cents per mile, 19 cents per mile driven for medical or moving purposes and 14 cents per mile driven in service of charitable organizations. The new rate applies to qualifying expenses that have incurred on or after July 1st. As of July 1, 2008, through Dec. 31, 2008 the rate is now increased to 58.5 cents a mile. Therefore, it is important that the qualifying miles incurred between January 1, 2008 and June 30, 2008 are recorded separately from the miles accrued on and after July 1. When filing at RapidTax.com, we’ll automatically apply the appropriate calculation on your business miles.

“Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile.”

– IRS Commissioner Doug Shulman.

Generally, the IRS adjusts the standard mileage rates annually based on a yearly study of the fixed and deductible costs of operating an automobile for business, charitable, medical or moving purposes; however, due to the increase on gas prices, the rate has been updated to accommodate the rising cost. Since this increase also applies to medical and moving miles, they have also been changed from 19 cents per mile to 27 cents per mile.

The IRS has already acknowledged the recent drop in gas prices towards the end of 2008. In result, the optional standard mileage rate for 2009 has decreased to 55 cents per mile, a slight adjustment from the 58.5 cents per mile mentioned above. Miles for medical or moving purposes will be calculated at a new rate of 24 cents per mile and 14 cents per mile for service of charitable organizations. These new rates will not effect the upcoming tax year, but rather your 2009 taxes to be completed in 2010.

For more information, refer to IRS Announcement 2008-63.