Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Feb 22

    When you think about receiving additional income, do you automatically wonder, “How is this going to affect my taxes or how much should I withhold to cover the additional income tax?” Well, you should know while most income you receive is taxable, there are several types of income that the IRS can’t touch. Listed below are some of the types of income that increase the money in your pocket without having to pay a percentage to the IRS:

    1. Tax free interest. Such as interest earned on bonds issued by state, territory, municipality or any political subdivision (municipal bonds).
    2. Carpool reimbursements. If you form a carpool to carry passengers to and from work, any payments received from the passengers are not included in your income.
    3. Profit from selling your house. It has to be your principal residence for two of the most recent five years. You can exclude as much as $250,000 in gain ($500,000 on a joint return) when you sell it. This can be claimed every two years.
    4. Compensation in the form of health care. If your employer pays your health coverage, this can be considered nontaxable compensation.
    5. Compensation in the form of life insurance.Coverage of term life insurance of $50,000 or less paid by the employer isn’t taxed to you. You pick the beneficiary and the company pays the premium. The company can deduct the expense and you have additional tax free income.
    6. Compensation in the form of sending you to school. Your company can pay and deduct as much as $5,520 per year in education assistance for either undergraduate or graduate courses.
    7. Compensation in the form of transportation fees. If you drive to work and have to pay to park, your company is now able to provide you free parking up to the maximum value of $230 per month.
    8. Compensation in the form of a cafeteria plan. A cafeteria plan can contain several benefits such as a Flexible Spending Account. You, as the employee, choose the nontaxable benefits and you have no additional income (this may include life insurance, disability benefits, dependent care, and/or accident and health benefits).
    9. Gifts and other nontaxable gifts such as tuition or medical expenses paid on someone else’s behalf.
    10. Inheritance.
    11. Disability insurance payments. If you purchase supplemental disability insurance with after tax dollars the benefits are nontaxable. Compensatory damages for physical injury or physical sickness and disability benefits from a public welfare fund are considered nontaxable.
    12. Child support payments.
    13. Employee discounts. If you purchase property from your employer and receive a discount, you do not have to include that discount as part of income nor pay tax on that discount.
    14. Meals on work premises. If the cost of meals served on your employer’s premises and furnished for the convenience of the employer, it is nontaxable.
    15. Employer provided vehicle. If your employer provides you a car for business use, the personal use in that car is considered nontaxable (non-cash fringe benefit).
    16. VA benefits.
    17. Compensation paid under a worker’s compensation act or a statue in the nature of a worker’s compensation act.
    18. Bankruptcy. Cancelled debt under Title 11 of the US Code.
    19. Disaster relief payments.
    20. Cash rebates.
    21. Scholarships and Fellowships.

    These are twenty-one types of income the IRS can’t touch, and more importantly leaving more money in your pocket. And I will let you in on a little secret… there are EVEN a few MORE!

  • Feb 8

    The Internal Revenue Service has announced that the optional standard mileage rates for use of a vehicle for business or medical purposes rose 1 cent, effective January 1, 2013.

    The standard mileage rates for use of car, van, pickup or panel van are now:

    • 56.5 cents per mile for business,
    • 24 cents per mile for medical or moving purposes, and
    • 14 cents per mile in service of a charitable organization.

    The rate for service to a charitable organization remains unchanged.

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

    A taxpayer always has the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.