IRS Issues Publication on Business Expenses
Millions of individual tax filers have business income either as sole proprietors or as sub-contractors. Many individual filers also have unreimbursed business expenses. The IRS recently issued Publication 535, Business Expenses, which provides valuable information for these filers. The publication contains useful hints for Tax Year 2013, for which many taxpayers are still completing returns and for Tax Year 2014, for which taxpayers are tracking expenses and making financial decisions.
For Tax Year 2013
Optional safe harbor method to determine the business use of a home deduction, also known as the simplified option for claiming the home office deduction. Beginning in 2013, taxpayers can use the optional safe harbor method to determine the deduction for the business use of a home.
Standard mileage rate. Beginning in 2013, the standard mileage rate for the cost of operating a car, van, pickup, or panel truck for each mile of business use is 56.5 cents per mile.
Additional Medicare Tax. Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:
- $125,000 if married filing separately,
- $250,000 if married filing jointly, or
- $200,000 if single, head of household, or qualifying widow(er) with dependent child.
Medicare wages and self-employment income are combined to determine if a taxpayer’s income exceeds the threshold. RRTA compensation should be separately compared to the threshold.
For Tax Year 2014
Standard mileage rate. Beginning in 2014, the standard mileage rate for the cost of operating a car, van, pickup, or panel truck for each mile of business use is 56 cents per mile.
Source: Internal Revenue Service at http://www.irs.gov/uac/Newsroom/More-than-Half-of-all-Income-Tax-Returns-Have-Been-Received-IRS-Issues-Publication-on-Business-Expenses