December 27, 2011 – Payroll Tax Cut Extension for First Two Months of 2012

At the eleventh hour, Congress approved a two-month extension of the employee-side payroll tax cut in the Temporary Payroll Tax Cut Continuation Act of 2011. The two-month extension, for January and February 2012, is intended to give lawmakers additional time to negotiate a full-year extension of the payroll tax cut through the end of 2012. Read more...

December 23, 2011 – IRS Announces 2012 Standard Mileage Rates

The IRS has released the 2012 optional standard mileage rates that employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles. Read more...

December 12, 2011 – Social Security Wage Base Increased for 2012

The Social Security Administration recently announced that the 2012 wage base for determining the Social Security tax has increased to $110,100, up from $106,800 for 2011. Read more...

November 25, 2011 – IRS Releases Guidance on Employee Use of Cell Phones

The Internal Revenue Service recently issued guidance designed to clarify the tax treatment of employer-provided cell phones. The guidance, issued as an IRS Notice, relates to a provision in the Small Business Jobs Act of 2010, enacted last fall, that removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers. Read more...

October 31, 2011 – Business & Energy Provisions Expire this Year Unless Congress Acts

Temporary Payroll Tax Cut. The 2010 Tax Relief Act reduced the employee-share of the OASDI portion of Social Security taxes from 6.2 percent to 4.2 percent for wages earned during the payroll tax holiday period covering calendar year 2011 up to the taxable wage base of $106,800. At an estimated price tag of $110 billion for 2011, the fate of extending this benefit, or a similar provision, into 2012 remains uncertain. Read more...

September 26, 2011 – Many Provisions Set to Expire at End of 2011 Unless Congress Acts

Congress returns from its August recess with taxes and spending, together with the adjacencies of job creation and deficit reduction, front and center on its agenda. Among the more significant considerations faced by Congressional leaders and the Obama administration are the fate of the Bush-era tax cuts that expire at the end of 2012, the role that tax reform will play within the Joint Select Committee on Deficit Reduction and the presidential campaigns, and the mix of short-term stimulus measures that may needed. Read more...

August 10, 2011 – Child & Dependent Care Credit

With summer coming to an end, now is a good time to remind parents that the cost of summer day camps may qualify for both a federal and California income tax credit.

The child and dependent care credit is available for parents who work, or are looking for work, and pay for the care of their children under 13 years of age. The cost of day camps are a qualifying expense, but the cost of overnight camps are not.

The federal credit is up to 35 percent of qualifying expenses. The maximum amount of qualifying expenses for one child is $3,000, and for two or more children it is $6,000.

For more information, see IRS Publication 503

August 1, 2011 – White House and Congressional Leaders Agree to Raise Debt Ceiling; Create Joint Committee on Deficit Reduction

President Obama and Congressional leaders have finally reached an agreement to raise the federal debt limit. The two part deal includes the creation of a joint select committee of Congress to determine additional deficit reduction measure before year end.

The deficit reduction package would cut spending but includes no revenue raisers at this time. The first part of the agreement is expected to cut approximately $1 trillion in federal spending over 10 years. The second part of the agreement creates a 12-member joint committee, which is charged with the goal of reducing the federal deficit by at least $1.5 trillion over 10 years.

The deficit reduction debate has generated a significant number of tax proposals, and tax reform of some sort now likely. Stay tuned . . .

June 29, 2011 – Sales Tax Rate to Drop on July 1, 2011

Effective July 1, 2011, the California sales and use tax rate will decrease by 1%. The temporary 1% increase that was implemented in April 2009 expires on June 30, 2011.

Please remember that local district taxes are still applicable, so tax rates vary within the state. For a list of rates, look here.

For Santa Barbara County, the sales tax rate is now 7.75%.

June 23, 2011 – IRS Announces Increase in Mileage Rates

The standard mileage rate for the business use of an auto has been increased from 51 cents to 55.5 cents per mile, effective July 1, 2011. The allowance for medical and moving mileage was also increased from 19 cents to 23.5 cents. The mileage rate for charitable contributions remains at 14 cents per mile, because it is fixed under Internal Revenue Code Section 170(i).