IRS Announces 2010 Standard Mileage Rates

The IRS has released the standard mileage rates for 2010.  There is a 5 cent reduction in the standard mileage rate for business purposes.  The full report as issued today appears below:

WASHINGTON — The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.



Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:


• 50 cents per mile for business miles driven


• 16.5 cents per mile driven for medical or moving purposes


• 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.


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 as determined by the same study. Independent contractor Runzheimer International conducted the study.


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 any vehicle used for hire or for more than four vehicles used simultaneously.


Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.


Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

Year End Tax and Business Plan Seminar

Mark your calendars for Saturday, December 5th as Peggy & Fred Kraft from Northwest Alpacas will be presenting their tax and business plan seminar just in time for year end tax planning.

Ideally, people who are considering purchasing their first alpacas will take this class before they spend their money. Most successful businesses start with a plan and we will help you create one for the alpaca business. But this is also a great class for anyone wanting an update on alpaca tax issues.

This class is being presented at Northwest Alpacas in Hillsboro, OR. There is a special year end rate of $25.00 so be sure to call or email Peggy or Fred directly to take advantage of this offer. Here is our contact info.

Peggy Stevens
Alpacas at Tucker Creek
peggy@alpacadigest.com
www.alpacadigest.com
877-915-0522 Toll Free

Fred Kraft
Northwest Alpacas
fred@alpacas.com
www.alpacas.com
877-788-3627

Look forward to seeing you on the 5th and feel free to send us any of your tax or business plan questions before or after the seminar

Section 179 and Other Items Adjusted for Inflation for 2010

Here is the announcement we have been waiting for--the limitations for Section 179 for 2010. For taxable years beginning in 2010, under §179(b)(1) the aggregate cost of any §179 property a taxpayer may elect to treat as an expense cannot exceed $134,000. Under §179(b)(2), the $134,000 limitation is reduced (but not below zero) by the amount by which the cost of §179 property placed in service during the 2010 taxable year exceeds $530,000. This is a huge reduction from the 2009 limitation of $250,000 on purchases not exceeding $800,000. Clearly 2009 is the year to make the bulk of your business asset purchases (and this certainly includes alpacas) especially when you consider that this year also has the 50% bonus depreciation deduction available on NEW asset purchases.

As shared in previous blog entries, this deduction is scheduled to be reduced again in 2011 to $25,000 on purchases not exceeding $200,000. So if you don't make your purchases in 2009 don't miss your opportunity in 2010.

The same publication also includes other deductions and limitations adjusted annually for inflation. Here is the link to the publication:

http://www.irs.gov/pub/irs-drop/rp-09-50.pdf

So start sharpening your pencils and figure out how these deductions can do you the most good while the limitations are at their maximum.

The Alpaca Show Ring Reflected as a High School Memory . . .

Kellie Overbey of Parson's Prairie Farm in Gladstone, Missouri, appeared in the Oak Park High School 2009 Year Book highlighting her family's alpaca farm. What a great opportunity to expose another generation to the rewarding experiences our industry has to offer.

Great Job, Kellie!

MFI PERUVIAN GLACIAL STORM

It is with great sadness that we share with you that Glacial Storm was euthanized on August 28, 2009, after being diagnosed with lymphoma. His passing leaves a large hole in our breeding program and his importance to us was not only his genetic make up but his personality as well. He was always a great teacher communicating what it meant to be a herdsire to our male cria.

Employee vs. Independent Contractor – Ten Tips for Business Owners

Many times when we are looking for help around the farm we run into this nagging problem--is the worker an employee or an independent contractor? Here is a great summary just released by the IRS. If you know this info up front you can structure your working relationship in such a way that you will stay in compliance with the requirements of the IRS.

Released August 21, 2009
If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them. Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.
2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.
7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
8. Workers can avoid higher tax bills and lost benefits if they know their proper status.
9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.
10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Links:
Contractor vs. Employee
Publication 1779
Publication 15-A

Alpaca Farm Days 2009

The last weekend in September you will find alpaca farms all over the United States and Canada opening their gates to welcome the public. This annual event is a great opportunity for us to share information about the breed and for you to get a better look at these wonderful animals. Alpacas at Tucker Creek will be open from 10:00 am to 4:00 pm on both Saturday, September 26th and Sunday, September 27th.

During the weekend you will have the opportunity to see the daily activities involved in working with alpacas including cleaning the barn and pastures, feeding, toe nail trimming, shearing and breeding--depending on your time of arrival. There will also be farm tours and fiber spinning demonstrations. We are fortunate to have local fiber artist, Peggy Boisvert, joining us for part of the weekend. Alpaca yarn and finished products are available in our farm store--a great way to start your Christmas shopping.

Please join us as we love sharing these wonderful animals with visitors. Refreshments will be served and there will be drawings throughout the day. The only cost for admission is a nonperishable food item for the Clatsop Community Action Regional Food Bank or the Clatsop County Animal Control Shelter. Look forward to seeing you there. Please follow this link for directions.