2008 - 2017 Tax Law Changes - JOYCE A. HERR, CPA, LLC

2017 Tax Law Changes
The STANDARD MILEAGE RATES FOR 2017 went into effect on January 1, 2017:
53.5 cents per mile for business miles driven
17 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

The 2017 PERMANENT FUND DIVIDEND was $1,100. This does mean that children will have to pay taxes on their dividend. Children can be included on the parents' return if they only have non W-2 income (the permanent fund, interest on savings accounts and dividends/capital gains on investment accounts). If they have W-2 wages, they do have to file their own return. For help with reporting their income, call or e-mail my office.

Beginning in 2017 the medical expense threshold will increase to 10% of adjusted gross income for taxpayers 65 and over (it was previously 7.5%).

Alaska's minimum wage went up to $9.80 an hour effective January 1, 2017. It will be adjusted every year after that for inflation with the new rate being effective on January 1 of each year.

TAX CHANGES FOR 2016
2016 STANDARD MILEAGE RATES:
54 cents per mile for business miles driven
19 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

The 2016 PERMANENT FUND DIVIDEND was $1,022. If the dividend was the only income for your child, then they will not pay any tax for 2016. If they have other income (W-2 wages, interest on savings accounts or investment income), they may have to pay taxes depending on their total income. Their income can be included on the parents' return or can be filed on a separate return.

Alaska's minimum wage went up to $9.75 an hour effective January 1, 2016. It will be adjusted every year after that for inflation with the new rate being effective on January 1 of each year.

TAX CHANGES FOR 2015
2015 STANDARD MILEAGE RATES:
57.5 cents per mile for business miles driven
23 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

TAX CHANGES FOR 2014
2014 STANDARD MILEAGE RATES:
56 cents per mile for business miles driven
23.5 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

TAX CHANGES FOR 2013
2013 STANDARD MILEAGE RATES
56.5 cents per mile for business miles driven
24 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

TAX CHANGES FOR 2012
2012 STANDARD MILEAGE RATES
55.5 cents per mile for business miles
23 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations

SAVINGS FOR EMPLOYERS: The HIRE Act went into effect on March 18, 2010. This Act allows employers to claim a payroll tax credit for the employer share of Social Security taxes for employees hired after February 3, 2010 and before January 1, 2011. For more information, see "Savings for Employers" under 2010 Tax Law Changes. If you didn't claim the credit in 2010, you still can by amending your 2010 quarterly 941 reports. You will still need to have your employees complete a W-11. Not sure how to decide if you're eligible for the credit or if it's worth it, call or e-mail me and we can discuss it.

TAX CHANGES FOR 2011
2011 STANDARD MILEAGE RATES - JULY 1 - DECEMBER 31, 2011
55.5 cents per mile for business miles
23.5 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations

2011 STANDARD MILEAGE RATES - JANUARY 1 - JUNE 30, 2011
51 cents per mile for business miles
19 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations

TAX CHANGES FOR 2010
2010 STANDARD MILEAGE RATES
50 cents per mile for business miles driven
16.5 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

SAVINGS FOR EMPLOYERS: The HIRE Act went into effect on March 18, 2010. This Act allows employers to claim a payroll tax credit for the employer share of Social Security taxes for employees hired after February 3, 2010 and before January 1, 2011. The covered employee must have worked less than 40 hours during the 60 days prior to the date employment begins. Also, the new hire can't be hired to replace another employee unless the other employee quit or was terminated for cause and must not be related to the employer. Employees must complete and sign a Form W-11. The credit is claimed on your quarterly 941 or annual 944. Not sure if you qualify or need more information - call or e-mail me - I'll be glad to help.

TAX CHANGES FOR 2009
MILITARY SPOUSES - A new law was signed into effect on November 11, 2009 (retroactive to January 1, 2009) allowing you to keep your residency when you move with your military spouse. What this means for you is that your earned wages in your new home "may" not be taxable at the new state's level (but "may" be taxable in your state of residency). For example, if you are an Alaska resident and you move with your military spouse to a new duty station outside of Alaska and work at your new home, you will be allowed to maintain your Alaska residency and your wages may be considered Alaska income, rather than income of your new location. Different states are interpreting the law differently (California requires the military member and the spouse to have the same resident state). You will need to decide what the best move is for you - If you claim residency in a no or low tax state, you will want to maintain your residency. If your new home has a lower tax rate, you may want to change your residency. For more information or to see how this new law affects you, call or e-mail me.

FIRST TIME HOMEBUYER – Did you purchase and occupy a new home in 2009 or will you sign a contract on a new home by April 30, 2010 and close by June 30, 2010? Have you (or your spouse) owned a principal residence in the last three years? If your answer is yes to the first question and no to the second, you may be eligible for the First Time Homebuyer’s Credit. The credit is equal to 10% of the purchase price or $8,000 (whichever is less). Also, so long as you live in the home for three years, you don’t have to pay it back (unlike the 2008 First Time Homebuyer’s Credit which you pay back over 15 years). The credit may be claimed on your 2009 return for 2009 purchases or on your 2009 or 2010 return for 2010 purchases (HINT: If you will be signing a contract by April 30, 2010 and closing by June 30, 2010 – file an extension for your 2009 return and file the return after you close. You’ll receive your refund much sooner than if you file by April 15, 2010 and then file an amended return.) You will need to attach a copy of your settlement statement to your return.

CURRENT HOMEOWNER CREDIT – If you’ve owned a home for five consecutive years of the last eight (as of the date of purchase of the new home) and purchase a new home between November 6, 2009 and April 30, 2010 or you enter into a contract to purchase by April 30, 2010 and close by June 30, 2010, you may be eligible for this new credit of 10% of the purchase price or $6,500 (whichever is less if you are married filing jointly – singles may only claim a maximum of $3,250). The new home must be occupied as your primary residence. (HINT: If you will be closing and occupying your new home by June 30, 2010 – file an extension for your 2009 return and file the return after you close. You’ll receive your refund much sooner than if you file by April 15, 2010 and then file an amended return.) You will need to attach a copy of your settlement statement and 5 consecutive years of Form 1098, Mortgage Interest, property tax records or homeowner's insurance records to your return.

VEHICLE SALES TAX DEDUCTION – If you purchase a new vehicle between February 16 and December 31, 2009, you may be able to deduct the sales and excise tax paid on the first $49,500 of the purchase price. If you live in a “no” sales tax state (such as Alaska), you may be able to deduct any state or local government fees that are charged on a per unit basis or are based on the vehicle’s cost. The deductions phase out for single filers with adjusted gross income over $125,000 and joint filers over $250,000.

COBRA Health Insurance – Were you laid off from your job? You may be eligible for subsidized COBRA Health Insurance premiums. Your previous employer is generally required to pay 65% of the premiums for up to 9 months. The employer may be able to recoup the subsidized expenses through a payroll tax credit or reduced payroll tax deposits. WARNING: If you are eligible for coverage under a spouse’s plan, the employer is not required to subsidize your premiums.

STANDARD MILEAGE RATES

2009 Mileage Rates:
55 cents per mile for business miles driven
24 cents per mile for medical or moving miles driven
14 cents per mile for charitable miles

TAX CHANGES FOR 2008

PROPERTY TAX DEDUCTION - Even if you don't itemize, you may be able to claim an additional $500 (Single, Head of Household, Married filing Separate) or $1,000 (Married filing Joint) if you pay property tax. This is added onto your Standard Deduction.

FIRST TIME HOMEBUYERS CREDIT - Did you buy a new house after April 8, 2008 and before July 1, 2009 and you haven't owned a house for at least 3 years before buying the new one? If so, you may be eligible for a credit up to $7,500 or 10% of the purchase price (whichever is less). If you purchase a home in 2009 and qualify for the credit, you can actually take it on your 2008 return, rather than waiting until you file next year. The downside - this is actually an interest-free loan and must be paid back to the IRS over the next 15 years, beginning two years after you claim it on your tax return. If you sell your home before the 15 years is up, the balance remaining may be due at that time.

ECONOMIC STIMULUS REBATE - If you didn't receive the rebate in 2008 or you didn't receive the full amount, you may be able to claim the difference on your 2008 tax return.

SMALL BUSINESS AND WORK OPPORTUNITY TAX ACT: President Bush signed this bill into law on May 25, 2007. Some of the highlights of the new law are 1)increasing minimum wage to $7.25 over the next two years; 2)married couples who jointly operate a unincorporated business will no longer have to file a partnership return - they will be able to claim their income and expenses on Schedule C as part of their Form 1040; 3)increasing the age limit for the "Kiddie Tax" to age 19 or age 24 (if the child is a full-time student). This law will be effective for tax years beginning after May 25, 2007 - for most of us, that means January 1, 2008. If you would like to read a full synopsis of the tax act, go to Small Business and Work Opportunity Tax Act or if you would like to discuss how this new tax act can affect you and/or your business, please call or e-mail me.

STANDARD MILEAGE RATES July 1 - December 31, 2008 Mileage Rates:
58.05 cents per mile for business miles driven
27 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes

January 1 - June 30, 2008 Mileage Rates:
50.5 cents per mile for business miles driven
19 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes