New Per Diem Rates for Business Travel Deductions

The IRS has revised their simplified per diem reimbursement rates for lodging, meals, and incidental expenses effective October 1, 2014. These rules provide convenience to employers and employees by eliminating the need to save detailed receipts for employee travel reimbursements. The rules have also been further clarified. Under the new IRS pronouncement, "incidental expenses" include only fees and tips given to porters, baggage carriers, hotel staff and staff of ships.


Transportation beween places of lodging or business and places where meals are taken (ie. cab fares) are no longer included in incedential expenses. Employees can be separately reimbursed for the actual costs of transportaion and mailing expenses, in addition to the flat daily amount for "incidental expenses". 

The new per diem rates are $259 for travel to any high-cost locality and $172 for any other place. These rates are an increase from those allowed earlier. High-cost localities include: Sedona AZ, Chicago IL, New Orleans LA, Bar Harbor ME, Conway NH, Kill Devil NC, Philadelphia PA, Charleston NC, Midland TX, Park City UT, Seattle WA, Jackson/Pinedale WY and several trendy places in CA, CO, FL, MD, MA, NY and most of the Washington D.C. area. Some areas are considered high-cost for only a portion of the year.

See IRS Notice 2014-27 for complete details.

- Mark S Gleason CPA
  www.lakes-cpa.com

Social Security Wage Base For 2015 Increases To $118,500

The Social Security Wage Base for 2015 will be $118,500. Wages and self-employment earnings in excess of this amount will not be subject to the 6.2% employer-paid social security tax or the 6.2% employee share. Earnings from self employment in excess of $118,500 will not be subject to the 12.4% social security portion of the self employment tax.

Single taxpayers with earnings from employment over $200,000 and married taxpayers with earnings over $250,000 will again be subject to the medicare surtax of .9%.

- Mark S Gleason CPA
  www.lakes-cpa.com

Contribution Limits to 401(k) Plans for 2015 are Increased

The IRS has announced upward revisions to the annual contribution limits for pension and other retirement plans for 2015. Taxpayers will be allowed to make contributions of $18,000 to 401(k) plans for 2015. The increase, from $17,500 to $18,000 also applies to 403(b) plans and 457 plans. In addition, the limit on "catch-up" contributions for taxpayers over the age of 50 has been increased from $5,500 to $6,000.

Many of my clients will benefit from these increases in the limits as these will result in bigger deductions for their retirement savings. Those that are saving for retirement with Roth accounts will benefit from the increased contribution limits as well.

- Mark S Gleason CPA
  www.lakes-cpa.com

Scam Alert for Minnesota Taxpayers

The Minnesota Department of Revenue has issued a warning about a new scam. Fraudsters are calling taxpayers and demanding immediate payments over the phone.

The callers claim to be from the Department of Revenue and tell people they owe the state money and must pay it immediately by credit card or money order or the police will be sent to their home.

The MN Department of Revenue says on their website that they never call taxpayers to demand immediate payment or threaten to send the police to a taxpayer's home.

- Mark S Gleason CPA
  www.lakes-cpa.com

You Can Avoid The Inconvenience Of A Late Tax Refund

Once again tax refunds for early filers in 2014 will be delayed.  Refunds were delayed in 2013 and 2014 because Congress didn't enact it's 2012 or 2013 tax laws until the following January. This is going to happen again for 2014 returns filed in 2015.

But there a way to avoid this problem.  The work-around is to reduce your withholding for November and December.  This will put the refund dollars you would have expected to collect in the form of a refund in January or February 2015 when you file your return into your hands now.  The reduction in withholding puts the cash into your paychecks now, instead of into your refund later.

- Mark S Gleason CPA
 - www.lakes-cpa.com

Put Your Dog to Work and Get a Tax Deduction

Service dogs, the canines that lead the blind and provide emotional support, have been gaining in popularity. They are helpful in many contexts and enjoy special status under the Americans with Disabilities Act. They also have special status under IRS rules because their medical expenses and the cost of their food and training can be deductible as a medical expense. No deductions are allowed for ordinary dogs.

Here is what IRS Publication 502, Medical and Dental Expenses has to say about it: "You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties".

The medical expense deduction in my experience is mostly an illusion because only the amount of medical expenses in excess of 10% of a taxpayer's income is deductible. Furthermore, taxpayers who do not itemize deductions are unable to benefit from medical deductions. Nevertheless, I predict that service dogs are going to continue to grow in popularity and that lots of dog owners are going to want to pass Fido off as a service animal in order to get a tax deduction.

- Mark S Gleason CPA
  www.lakes-cpa.com