Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 684 other subscribers
  • Blog Stats

    • 313,354 hits
  • Posts By Day

    December 2022
    M T W T F S S
     1234
    567891011
    12131415161718
    19202122232425
    262728293031  
  • Subscribe

  • Special Pages

Archive for December, 2022

IRS Standard Mileage Rates For 2023

Posted by taxguru on December 29, 2022

IRS has released its standard mileage rates for the types of driving during 2023 that can affect taxes.

From today’s IRS news release:

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
  • 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

While these actual deductions won’t be claimed for more than a year, when 2023 tax returns are filed, the rates are useful for current situations, such as employee reimbursements and charges to customers by some businesses.

These rates are supposed to be for all miles driven during 2023. However, as we saw earlier this year, if there are major changes up or down in the costs to operate vehicles (fuel being the most common), these rates might be modified mid-year.

Posted in IRS, Vehicles | Comments Off on IRS Standard Mileage Rates For 2023

IRS Raising Its Interest Rates Again

Posted by taxguru on December 3, 2022

For the fourth straight quarter, IRS will be raising the interest rate that it charges on back taxes and pays on late refunds. As of 1/1/23, it will be 7.0%. This is good news for those who have refunds coming, but not so good if you owe IRS money.

With most banks still paying ridiculously low rates on their savings accounts, we may see the return of a strategy to maximize interest yields by “investing” with the IRS. There have been cases in the past where taxpayers intentionally overpaid their taxes to IRS by “accidentally” leaving off large legitimate deductions. A few years later, they (hopefully) “notice” their mistake and file an amended return (1040X) with IRS to recoup those overpaid taxes and much more interest on top of that than they could have earned with alternative uses of that money.

Anyone considering such a tactic should heed a few warnings:
1. If the 1040X is not submitted within the three-year statute of limitations, the refund will be forfeited and considered to be a gift to the IRS.

2. Amended returns receive much more scrutiny from IRS than original returns, especially when claiming a refund. When examining an amended return, it is not uncommon for IRS to initiate a full-blown audit on other things on the return, not just the item triggering the amendment. I have seen this happen and the ensuing hassles caused the taxpayers to regret ever filing the amended return.

.

How long will this upward trend in interest rates continue? No sane person is anticipating a slow-down in the current inflation snowball for at least another two to three years, when there may be a new occupant of the White House. By then, the rate will definitely be in the double digits, which hasn’t been the case since the last quarter of 1991.

.

IRS Press Release Announcing the Higher Interest Rate:
Interest rates increase for the first quarter of 2023

.

A very handy chart of IRS Interest Rates, going back to the beginning of 1987, including this section for the past few years.

.

Posted in inflation, interest, IRS | Comments Off on IRS Raising Its Interest Rates Again