The IRS has issued the 2014 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, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56 cents per mile for business miles driven, down from 56.5 cents per mile in 2013
• 23.5 cents per mile driven for medical or moving purposes, down from 24 cents per mile in 2013
• 14 cents per mile driven in service of charitable organizations, unchanged from 2013

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

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 requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80 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.

For 2013, the maximum IRA contribution is $5,500 — $6,500 if you’re age 50 or older on Dec. 31. (The maximum IRA contribution or deduction may be reduced or eliminated depending on various factors.) But if you’re self-employed, you may be eligible for a retirement plan that allows you to make much larger contributions. As long as you set up one of the following plans by Dec. 31, 2013, you can make deductible 2013 contributions as late as the 2014 due date of your tax return:

Profit-sharing plan. This allows discretionary contributions and flexibility in plan design. The 2013 contribution limit is $51,000 ($56,500 for taxpayers age 50 and older).

Defined benefit plan. This plan sets a future pension benefit and then actuarially calculates the contributions needed to attain that benefit. So you may be able to contribute more to a defined benefit plan than to a profit-sharing plan. The maximum future annual benefit toward which 2013 contributions can be made is generally $205,000.

Various caveats and limits apply, so contact us for details. But act soon; there’s not much time left to set up a plan for 2013.

Every December are your employees scrambling to use up their vacation time because of limits on what they can roll over to the new year? Or do you allow rollovers and have long-time employees who’ve built up large balances that create a significant liability on your books? Then you may want to consider a paid time off (PTO) contribution arrangement that allows employees with unused vacation hours to elect to convert them to retirement plan contributions.

If the plan has a 401(k) feature, it can treat these amounts as a pretax benefit, similar to normal employee deferrals. Alternatively, the plan can treat the amounts as employer profit sharing, converting the excess PTO amounts to employer contributions.

If you’d like to offer this option, you simply need to amend your plan. However, you must still follow the plan document’s eligibility, vesting, rollover, distribution and loan terms, and additional rules apply. Please contact us for more information on the ins and outs.

Maybe. Deductions are more valuable when tax rates are higher, and higher-income taxpayers face higher rates in 2013. But the return of the itemized deduction reduction could make your donation deduction less valuable. Also keep in mind that the amount of your deduction depends on various factors, including what you give. For example:

Long-term capital gains property. This might be stocks or bonds held more than one year. You may deduct the current fair market value. You also avoid any tax you’d pay on the gain if you sold the property. So such property can make one of the best donations.

Tangible personal property. Your deduction depends on the situation:

• If the property isn’t related to the charity’s tax-exempt function (such as an antique donated for a charity auction), your deduction is limited to your basis.
• If the property is related to the charity’s tax-exempt function (such as an antique donated to a museum for its collection), you can deduct the fair market value.

Services. You may deduct only your out-of-pocket expenses, not the fair market value of your services. You can deduct 14 cents per charitable mile driven.

It’s important to pay attention to the many additional rules and limits that apply. If you don’t, your benefit could be smaller than expected. So before making a significant donation, please contact us to find out the tax benefit you’ll receive.

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The Ohio Department of Taxation owes millions of dollars in tax refunds to businesses that inadvertently overpaid their taxes. Now department officials are making contact with the businesses to make sure they are refunded every dollar owed to them.

The department has identified about $30 million owed to business taxpayers and will be contacting those businesses and helping them apply for their refund. This new wave of refunds involves three taxes:

• Sales and use
• Corporate franchise
• Employer and school district withholding

Find out whether your business is eligible for a refund by calling 800-304-3211, or contact the department via email.

The tax department’s practice of not notifying taxpayers of overpayments came to light through an investigation by the Ohio Inspector General. A report released in mid-November cited the department for failure to make refunds even after requests were submitted. In addition, the department did not have standard written policies or procedures for handling overpayments.

State law does not require the department to notify taxpayers of overpayments; however, the law stipulates that overpayments are refundable upon request within three or four years, depending on the type of tax. Money not requested within the statute of limitations is kept by the state.

Overpayments are common because businesses generally make payments in advance based on estimates of what they will owe.

Ohio Tax Commissioner Joe Testa was surprised by the investigation’s findings and directed department officials to immediately make arrangements for tax refunds. He indicated the practice of not making refunds was part of the culture of the department and had been going on for years.

To address the issue, Reps. Mike Duffey, R-Worthington and Michael Stinziano, D-Columbus, are co-sponsoring legislation requiring the Ohio Department of Taxation to notify businesses when they have overpaid their taxes and qualify for a refund. Governor Kasich supports their initiative.

Nearly a year ago, the Department of Taxation discovered there were overpayments associated with the commercial activity tax (CAT) and began issuing refunds totaling $14 million to 3,500 companies that had overpaid.