Posts Tagged ‘Marie Jett’
by Larry Greenwalt, CPA and Marie Jett, CPA
If you have been following our newsletters, you are aware that the new estate tax law raised each individual’s lifetime exemption to $5,000,000. Less understood by many is the fact that under old law, each person was limited to a lifetime exemption of only $1,000,000 before incurring a gift tax (excluding individual annual gifts of $13,000 or less). Under the new law, the lifetime exemption is increased to $5,000,000.
Marie Jett, CPA | Member of the Tax Services Group
There are a few options that employers have available to them in order to account for vehicles used in business. The following methods and policies describe the options available to an employer.
by Marie Jett, CPA, Tax Manager
There are a few options that employers have available to them in order to account for vehicles used in business. The following methods and policies describe the options available to an employer.
Reimburse employees
For vehicles owned or leased by the employee, the employer can reimburse the employee for miles used for business purposes, which for 2011 is 51 cents per mile. Under this method, employees submit a mileage expense report detailing the miles driven, location driven to, date, and business purpose. Once expense report is submitted, employer will reimburse employee. As long as mileage reimbursement rate doesn’t exceed the IRS allowance (51 cents), the reimbursement is exempt from employee’s wages.
Employer-provided vehicles
The reporting methods available to a business vary depending on the personal use allowed by the employer. The first reporting method is used for simplified recordkeeping on the employee’s part. There are two policies an employer can establish and these policies state when and how much an employee can use the vehicle for personal use.
The first policy an employer can adopt will only allow the employee to use the car for de minimis, or minimal, personal use. This policy requires a written statement stating the vehicle cannot be used for personal use, unless it’s de minims in nature, to the employees and also requires the vehicle to be kept on the employer’s premises during nonbusiness hours. Under this policy, nothing is required to be added to the employee’s wages.
A second policy states that for personal purposes, the car can only be used for de minimis or commuting purposes. This policy also requires a written statement which must be provided to employees. For this policy to be applicable, the employee must be required to commute to and/or from work in the vehicle for a bona fide noncompensatory business reason – i.e. the employer requires the employee to commute to/from work in the vehicle. The employee cannot be an officer, director, or owner of a greater than 1% interest. Under this method, the employer will account for the commuting miles by including an additional $1.50 per one-way commute on the employee’s W-2.
For both of the policies listed above, the employer must reasonably believe the vehicle is not being used for any personal use beyond de minimis or commuting purposes, depending on the policy used. Also, both policies will require supporting evidence that policies are being adhered to and requirements met should the IRS audit the business. To help substantiate that requirements are met, a mileage log should be kept by the employee showing miles driven, location driven to, date, business purpose and total miles for the year. Should the employee not adhere to the policies above or the requirements cannot be substantiated, the employee will need to include the personal use as taxable income.
The second method an employer can adopt is to have the employee to keep record of the personal and business use of the automobile. If business use cannot be substantiated, the use will be considered personal and taxed to the employee. At the end of the year, the business miles and personal miles are determined and a percentage of business to personal mileage is calculated. The personal mileage percentage is then multiplied times the fair market value of the vehicle to get the personal usage value, which is taxed to the employee on his/her W-2 with the appropriate taxes being withheld.
A third method would require no mileage substantiation by the employer or the employee. Under this method 100% of the value is included as taxable income to the employee, included on the employee’s W-2 and taxes withheld.
Personal miles
Personal miles will include commuting miles. Commuting miles would be miles driven from the employee’s residence to the established place of business or employment. These miles are considered nondeductible personal miles. If the employee makes a business related stop before or after reaching the place of employment, these miles could be deductible. For deductibility in certain instances, see chart below.
|
Home to office |
Nondeductible |
|
Office to business related stops |
Deductible |
|
Home to 1st business related stop |
Nondeductible |
|
1st business stop to 2nd business stop |
Deductible |
|
2nd business stop to home |
Nondeductible |
If, home to office is 20 miles, and employee drives from home to 1st business stop to 2nd business stop to home, which is 30 miles, then the 10 miles in excess of commuting miles are Deductible.
The rules above do not apply to certain vehicles in certain instances. For example, these rules do not apply to a qualified nonpersonal use vehicle. An example of a qualified nonpersonal use vehicle is a delivery truck with seating for just the driver or the driver and a folding jump seat. Another example of a qualified nonpersonal use vehicle is any vehicle designed to carry cargo with a loaded gross vehicle weight greater than 14,000 pounds.
by Marie Jett, CPA | Manager, Tax Services Group
On September 16 the Senate passed its version of the Small Business Jobs Act of 2010. As of September 21, the House has yet to pass the bill, but the House is expected to pass the bill later this week without modifications, then it heads to the President for signature. We’ll keep you updated on any changes. The following describes a few key features that are in the Senate passed bill. This bill may be called the Small Business Jobs Act, but it affects both large and small businesses, as well as individuals. First, a number of tax law changes in this bill affect depreciable property.
by Marie Jett, CPA | Manager, Tax Services Group and Member of the Manufacturing & Distribution Services Group
In the last e-newsletter issue, we looked at the Health Care Bill and its affect on businesses. This time we are discussing the affect this legislation has on individuals and the many tax law changes this bill has brought about. Specifically we discuss the requirement that individuals have health insurance or face a penalty, tax credits to individuals, the increase in Medicare tax to wages, and the additional Medicare tax on investment income.
by Marie Jett, CPA | Manager, Tax Services Group and Member of the Manufacturing & Distribution Services Group
The recently enacted health care legislation bill requires applicable large employers (50 or more employees) to offer and contribute to their workers’ health insurance or pay a penalty. Small employers who offer health coverage may be able to receive a tax credit. Under the new law, effective for months beginning after Dec. 31, 2013, a large employer that 1) does not offer coverage for all its full-time employees, 2) offers minimum essential coverage that is unaffordable, or 3) offers minimum essential coverage that consists of a plan under which the plan’s share of the total allowed cost of benefits is less than 60%, is required to pay a penalty if any full-time employee is certified to the employer as having purchased health insurance through a state exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee.
by Marie Jett, CPA | Manager Tax Services
Earlier this year, the President signed into law the 2010 HIRE Act. The act was created to try and provide employers tax incentives to hire employees. Two new laws created from this act are the payroll tax holiday and the retained worker tax credit. Effective for tax years ending after March 18, 2010, employers have been given a payroll tax holiday on the 6.2% OASDI portion of the employer’s share of Social Security Tax for the remainder of 2010 and a retained worker tax credit of up to $1,000 per retained employee.
By Dana Hunsinger, Indy Star Reporter
As an accountant, Marie Jett has been able to figure one thing for sure: Work is her life right now.
She’s clocking 70-hour weeks, leaving the office at 10:30 p.m. some nights and logging time on the weekends.
It’s tax season crunch time, and that has Jett and the nation’s 1.3 million accountants working insane hours, losing sleep and missing the family.