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TAX IRS ISSUES 2020 STANDARD MILEAGE RATES FOR BUSINESS, MOVING, MEDICAL AND CHARITY DEDUCTIONS
IRS Issues 2020 Standard Mileage Rates for Business, Moving, Medical and Charity Deductions
DECEMBER 31, 2019
The Internal Revenue Service has issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019,
17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019, and
14 cents per mile driven in service of charitable organizations.
The business mileage rate decreased one half of a cent for business travel driven and three cents for medical and certain moving expense from the rates for 2019. The charitable rate is set by statute and remains unchanged.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details, see Rev. Proc. 2019-46.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
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. In addition, the business standard mileage rate cannot be used for more than five vehicles used simultaneously. These and other limitations are described in section 4.05 of Rev. Proc. 2019-46.
Notice 2020-05, posted today 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 2020 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).
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Changes to Internet Sales Laws begin in Massachusetts.
This regulation explains the new Massachusetts sales and use tax collection requirements that apply to out-of-state "remote" sellers and marketplace facilitators ("marketplaces") as of October 1, 2019. Remote sellers must collect tax on sales of tangible personal property or services into Massachusetts when they have Massachusetts sales that exceed $100,000 in a calendar year. Marketplaces must collect tax on behalf of third parties ("marketplace sellers") selling through the marketplace when the marketplace's total Massachusetts sales (including those facilitated on behalf of marketplace sellers and those made directly by the marketplace on its own behalf) exceed $100,000 in a calendar year. As of October 1, 2019, the rules in 830 CMR 64H.1.7: Vendors Making Internet Sales have ceased to apply.
Masea has just published how the Massachusetts Income tax rate will go down next year. Happy reading.
Here’s why the Massachusetts state income tax will go down next year — one last time
It's been nearly 20 years coming.
Massachusetts residents will see their state income tax rate drop slightly for the second-straight — but final — time next year.
Gov. Charlie Baker’s administration announced Friday that the state hit a number of revenue metrics, legally triggering a reduction of its Part B individual income tax rate from 5.05 percent to a flat 5 percent.
The new rate takes effect Jan. 1. It also marks the finale of a long-running process to lower the state income tax to a rate demanded by Bay Staters back at the beginning of the century.
In 2000, Massachusetts voters approved a ballot measure, Question 4, to reduce the state’s then-5.85 percent income tax rate to 5 percent over the course of three years.
Nope. Those cuts apparently were too steep and, combined with slower economic growth at the time, resulted in state revenue shortfalls with cascading effects.
In early 2002, The Boston Globe reported that then-acting Gov. Jane Swift had been forced to cut state aid to many suburban communities. And those cuts — in communities that had overwhelmingly supported Question 4 — sent officials scrambling to either hike property taxes or cut local services to make up for the lost revenue. Schools, fire stations, and police patrols alike were all put under the chopping block.
Later that year, state lawmakers stepped in, passing a law freezing the rate at 5.3 percent and enacting new safeguards to make the road to 5 percent a little less rocky.
The 2002 law allowed the state to lower its tax rate at a lesser rate, 0.05 percent, each year, but only if five specific revenue growth metrics were met. Lawmakers also suspended another voter-approved 2000 ballot measure allowing residents to claim charitable deductions on their state tax returns.
Massachusetts didn’t see another income tax reduction for a decade. But in 2012, the state hit all five revenue measures, and the rate dropped 0.05 percent to 5.25 percent. It happened again in 2014, 2015, and 2016 — and another time last year, bringing the rate to 5.05 percent. And late Friday morning, state officials announced that the Department of Revenue had certified that the five tests had been met once again — and for the last time.
“We are pleased that the necessary revenue benchmarks have been met and the income tax rate is being fully reduced to 5%,” Lt. Gov. Karyn Polito said in a statement, celebrating the occasion. “This tax cut reflects steady economic growth and will provide a well-deserved break to Massachusetts workers.”
Gov. Charlie Baker noted that the state was “finally making happen what voters called for almost 20 years ago.” The 5 percent rate is the lowest the state’s income tax has been since 1985.
Officials estimate that the final adjustment will save Massachusetts taxpayers $88 million in the current fiscal year and approximately $185 million in fiscal year 2021 beginning next October. Part B income excludes income from things like stocks and capital gains.
At the individual level, that 0.05 percent change means an extra $20 for a single renter making $50,000 a year. For a married homeowner with a $125,000 salary and a family a four, it means $50. For those making in the high six-figures, it adds up to several hundred dollars in savings.
Hitting the 5 percent mark also triggers the return of the state charitable deduction that lawmakers had nullified, effective Jan. 1, 2021. Compared to the 0.05 percent income tax rate change, officials estimate the deduction will have an even more significant impact, to the tune of $300 million a year.
The Baker administration says they had already incorporated the reduction into their future assumptions, meaning there is no change in their revenue outlook — barring another ballot question, of course.
We prepare and e-file Income taxes for individuals and businesses. FJE Tax Solutions is your number one gateway for maximum tax refunds. We will search every directions and credits to get you the largest refund possible. This is our obligation to you and it is guaranteed. We are dedicated licensed tax professionals with unlimited rights to represent a tax payer before the Internal Revenue Service.
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