Tax changes for the coming year

IRS ISSUES STANDARD MILEAGE RATES FOR 2019

The Internal Revenue Service has issued the 2019 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on January 1, 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
14 cents per mile driven in service of charitable organizations.

The business mileage rate increased 3.5 cents for business travel driven and 2 cents for medical and certain moving expense from the rates for 2018. The charitable rate is set by statute and remains unchanged. 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. 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 four vehicles used simultaneously. These and other limitations are described in section 4.05 of Rev. Proc. 2010-51. Notice 2019-02, posted 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.

REMINDER: DECEMBER 31 IS DEADLINE FOR SEVERAL ACTIONS:

Completion of divorce agreements in order to obtain deduction for alimony payment. Alimony payments made under a divorce or separation agreement that is executed before January 1, 2019, are deductible by the payor and included in the income of the payee. For alimony payments made under a divorce or separation agreement executed after December 31, 2018, the payor can no longer deduct the alimony payments, and the payee doesn't include them in income. Gifts. The annual gift tax exclusion is $15,000 for each donee to whom a donor makes gifts. In order to take advantage of the 2018 gift tax exclusion, gifts must be made by December 31, 2018. Required minimum distributions. Taxpayers who have reached age 70-1/2 must make annual required minimum distributions (RMDs) from their IRAs, 401(k) plans, etc. The deadline for 2018 RMDs is December 31, 2018.