STRATEGIC ISSUES...ONLINE
For week
of October 30,
2006, Issue #282
Featured
Articles:
1. Rules
for Deducting Car and Truck Expenses
2. Tech
Tip Weekly: Using
Email Folders Effectively
3.
Compliance Calendar
If you would like
to have further information on any of these
articles, let us know. We would appreciate
receiving your comments and/or suggestions, anytime!
acarroll@pmcpa.com
1. Rules for
Deducting Car and Truck Expenses
As part of an ongoing effort
to make a dent in the estimated $30 billion of annual
tax revenue lost as a result of overstated deductions,
credits and exemptions, the IRS has issued a fact sheet
that provides an overview of the rules for deducting car
and truck expenses. The fact sheet covers the types of
deductible transportation expenses, the methods for
calculating the deduction (i.e., standard mileage rate
or actual cost method), and recordkeeping requirements.
A taxpayer may deduct
transportation expenses for:
1. Traveling from one work
location to another work location within the taxpayer's
tax home area;
2. Visiting customers.
3. Attending a business
meeting away from the regular workplace; and
4. Getting from home to a
temporary workplace if the taxpayer has one or more
regular places of work.
The costs of travel between
home and a regular place of work are nondeductible
commuting expenses.
The standard mileage rate
method may be used to compute vehicle expenses. If the
method is used for a leased vehicle, it must be used for
the entire term of the lease. The 2006 standard mileage
rate is 44.5 cents per mile.
The standard mileage rate is
used in place of the actual cost method. Certain
taxpayers may not use the standard mileage rate,
including: taxpayers who offer the car for hire (e.g.,
taxis), use five or more business cars at the same time,
claim depreciation or the section 179 allowance on the
car, or are rural mail carriers who receive a qualified
reimbursement.
If a vehicle is used for
personal as well as business purposes, only expenses
attributable to the percentage of business use are
deductible under the actual cost method. Depreciation,
lease payments, registration fees, licenses, gas,
insurance, oil, repairs, garage rent, tolls, tires and
parking fees may be deducted under the actual cost
method.
Recordkeeping requirements
depend upon whether the standard mileage rate or actual
expense method is used. If the standard mileage rate is
used, the taxpayer should keep a daily log showing the
miles traveled, destination and business purpose.
A mileage log should be
maintained by persons using the actual cost method in
order to establish business use percentage. Receipts,
invoices and other documentation are needed to verify
expenses. The taxpayer must be able to prove the
original cost of the vehicle and the date it was placed
in service for business use in order to claim
depreciation.
2. Tech Tip
Weekly: Using Email Folders Effectively
Most,
if not all, e-mail clients allow you to use folders to
organize your e-mail. In fact, folders are a great boon
to keeping your incoming e-mail uncluttered and under
control.
Don't confuse e-mail folders with file folders on your
disk drive. Conceptually, they're similar to each other
only in that each allows you to organize information.
While some e-mail clients may use file folders to store
your e-mail, many do not. The folders are maintained
within the client as a logical structure, with no
relation to file folders on the hard drive.
Rather than leaving all your e-mail in your inbox, give
some thought to how you can organize it using folders.
For instance, you could have a folder for your
work-related e-mail or a folder for each project you're
working on. You could also create folders for family
e-mail, hobbies, and other categories.
You
can configure most (if not all) e-mail clients to
display available folders onscreen. The folders in MS
Outlook are part of the Navigation pane. When displayed,
the pane is at the left side of the program window.
The
Navigation pane (or its equivalent) is helpful when
working with folders. You can easily drag messages from
one folder and drop them in another or move entire
folders. To create an e-mail folder, simply right-click
an existing folder and choose New Folder. Name the
folder and start using it to store messages.
3.
Compliance Calendar
November 3
-Employers deposit Social
Security, Medicare and withheld income tax for October
28, 29, 30, and 31.
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