SEAN T. SULLIVAN, CPA, PC
Certified Public Accountant
 

Wednesday, March 10, 2010

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513 Lincoln Avenue
Erie, Pennsylvania 16505.2451

Telephone  ~  814.455.3089
Facsimile  ~  814.455.7646
E-mail  ~  seancpa@seancpa.com
 

INTERNAL REVENUE SERVICE (IRS) CIRCULAR 230 NOTICE - To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. Federal tax advice contained in or accessed from this web site (including attachments) is not intended or written to be used, and cannot be used, by the reader/recipient for the purpose of (a) evading taxes or penalties under the Internal Revenue Code, or, (b) promoting, marketing or recommending to another party any transaction or matter addressed herein.

INTERNAL REVENUE SERVICE (IRS) CIRCULAR 230 NOTICE - See notice at left of page.

**  Your tax advisor should always be consulted before undertaking any tax planning, as results vary from taxpayer to taxpayer. **

2009 TAX PLANNING CONSIDERATIONS

Revised State Minimum Wage Rates

The federal minimum wages rates changed as of July 24, 2009. The following link provides a table of the current minimum wage rates by state. Minimum wage rate.

2009 Standard Mileage Rates Released (IR-2008-131; Rev. Proc. 2008-72)

The IRS has released the 2009 optional standard mileage rates to be used by employees, self-employed individuals and other taxpayers to compute deductible costs of operating an automobile (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes. The 2009 rates for business, medical and moving purposes are higher than the rates for the first half of 2008 but lower than the rates for the second half of 2008, which were raised by a mid-year adjustment in response to a spike in gasoline prices

Business Mileage Rate - The standard mileage rate for business mileage will be 55 cents per mile. When the standard business mileage rate of 55 cents is used for automobiles owned by the taxpayer, depreciation will be considered to have been allowed at a rate of 21 cents per mile. Such depreciation reduces the taxpayer's basis in the automobile. The standard business mileage rate may not be used for automobiles used for hire (e.g., taxicabs), or when five or more automobiles are owned or leased and used simultaneously by the taxpayer (e.g., fleet operations). Rules providing for substantiation of an employee's ordinary and necessary expenses for local travel or transportation away from home are also provided. Such expenses will be deemed substantiated when the employer, its agent or a third-party provider provides a mileage allowance under a reimbursement or other expense allowance arrangement.

Medical, Moving Mileage Rate - The standard mileage rate for medical and moving expenses will be 24 cents per mile.

Charitable Mileage Rate - The standard mileage rate for charitable purposes will remain at 14 cents per mile.

2009 Earnings for Social Security Purposes

If you are under your normal retirement age and receive Social Security Benefits, you are limited to the amount you can earn before being required to return a portion of those benefits. Generally, for 2009, for every $2 you earn in excess of $14,160 per year you will be required to repay $1 to the Social Security Administration. The allowable earnings amount for 2008 is $13,560. If you reach normal retirement age in 2009, you will repay $1 of every $3 you earn in excess of $37,680. The allowable earnings for 2008 if you reached normal retirement age is $36,120.

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