IRS Standard Business Mileage Rate
Under the standard mileage rate method, a taxpayer who owns or leases an automobile (including a van, pickup or panel truck) and uses it for business may claim an expense deduction equal to the standard mileage rate time the number of business miles traveled in the year.
I find that medical and dental offices use this figure frequently for reimbursing employees when they use their automobile for the business. The new IRS prescribed rate for 2010 is 50 cents per mile, down from last year’s mileage rate.
Payroll Tax Figures
For those of you who are completing payroll for your employees, please take note of the following:
Because there is no Cost of Living Adjustment for the year, the Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2010 will remain the same as in 2009 – $106,800.
The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers – one for Old Age, Survivors and Disability and Insurance (OASDI; commonly known as Social Security tax), and the other for Hospital Insurance (HI; commonly known as Medicare tax).
The FICA tax rate for employees and employers is 7.65% each – 6.2% for OASDI and 1.45% for HI.
For self-employed workers, the FICA tax is 15.3% – 12.4% for OASDI and 2.9% for HI.
There is a maximum amount of compensation ($106,800 in 2010) subject to the OASDI tax, but no maximum for HI.
Election to expense capital purchases subject to change
The Economic Stimulus Act of 2008 increased the Section 179 allowance to $250,000 of qualified equipment purchases for any year beginning in 2008.
The American Recovery and Reinvestment Act extended this amount through the end of 2009.
For now, the 2010 amount is scheduled to revert back to the amount based upon the 2007 amounts plus an inflation adjustment, which we believe will put the deduction limit at an estimated $135,000.
I suspect that Congress will take this matter up again with a future bill and we may see this adjusted once again.
Stay tuned for more on this election.
Retirement Plan Limits
The maximum elective deferral amount (voluntary contribution) for 401(k) plans remains unchanged at $16,500.
Those who are 50 years or older can contribute an additional $5,500 as a “catch-up” contribution.
For those with SIMPLE plans, the elective deferral amount also remains at $11,500 and the additional “catch-up” remains at $2,500, for those over the age of 50.
Employer Health Savings Accounts
Up to $6,150 may be put into an HSA for those with family coverage and $3,050 for individual coverage.
Account owners who are 55 or older may put an additional $1,000 in their account. Minimum deductibles for HSA’s increased to $2,400 for family coverage and $1,200 for individual coverage.
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