Sommerville & Associates, P.C.

In Notice 2024-8 issued on 12/14/23, the IRS announced the new mileage rates effective January 1, 2024. The rates are 67 cents per mile for business miles, 21 cents per mile for medical miles and 14 cents per mile for charitable miles. The IRS has the authority to set the rates for the business miles and the medical miles. The rate for charitable miles is set by the Internal Revenue Code and cannot be changed without a change to the law.

PREPARING FOR 2023 TAX FILINGS DUE IN 2024

In the past many forms filed by a business with the IRS/SSA could be filed on paper, unless an organization was filing a total of 250 or more of the forms. For example, Forms W-2 and/or 1099 did not have to be filed electronically unless an organization was filing 250 or more of the forms. This is all changing! If an organization is going to file 10 or more of a combination of the following forms, the forms will need to be filed electronically starting January 1, 2024. (This includes your 2023 payroll forms.)
• W-2
• 1099 series
• 1098 series
• W-2G
• 1042-S
• 1094
• 1095 series
• 3921
• 3922
• 8027
There are numerous online systems available that can assist an organization with these filings. The Social Security Administration operates an online filing option for smaller businesses filing Forms W-2 and the IRS has created the Information Returns Intake System (IRIS) for filing Forms 1099. These forms may have different due dates, but the Form W-2 and the Form 1099-NEC are both due to the government and the participant by January 31, 2024 for the 2023 tax year. Contact your CPA if you have any questions or need further information.

The Employer Retention Credit (ERC) has provided much needed funding for many employers over the past two years. Unfortunately, companies have cropped up promising improper ERC claims. Many incorrectly state that every employer qualifies and promise big refunds from the IRS. Most of these companies charge a fee based on a percentage of the refund gained. Please exercise due diligence in considering these companies. Churches should use extra caution as these companies may not be aware that the ERC may not be claimed on wages paid to ministers. Additionally, the percentage fee arrangements may create a higher fee than would be charged by a CPA firm for similar work. Employers eligible for the ERC that is available for 2020 and 2021 may still take advantage of the credit by filing amended payroll tax returns. Seek professional assistance from a trusted advisor to determine if your church or organization is eligible.

In a news release issued by the IRS on June 17th, it was announced that they would be expanding the use of voice bot options to provide taxpayers with faster service and cut wait times for services. This could be an improvement over the current message that most of us receive when we call the IRS informing us that due to the large volume of calls, please just hang up and call again another day. We are all feeling the pains when the one government agency that touches every single person and business in our country is drastically understaffed. The positive news is that they are hiring, if you know anyone who needs a job.

The IRS has announced that it anticipates completing the processing of 2020 individual tax returns filed in 2021 by the end of the month. At least the "error free" returns. Normally all prior year returns have been processed by the start of a filing season, but that was not the case as we entered the 2022 filing season for 2021 returns. After clearing the individual returns, the IRS will move on to the backlog of business returns. If you are still one of the millions of filers using paper, we strongly encourage you to find an electronic means to file your returns. Paper has become the down fall for the IRS during these unprecedented times as they still face a mound of unanswered letters along with returns still to process for 2020 and now 2021 tax years.

Due to rising gas prices, the IRS increased the standard mileage rate for business miles to 62.5 cents per mile. This change is effective July 1, 2022 for the last half of 2022. For the self-employed taxpayer, it will be important to provide mileage records to your tax preparer separated for the first half of 2022 from the last half of 2022. (Of course, we know everyone is keeping those contemporaneous records of miles driven, with the destination and purpose documented in order to meet documentation standards for this tax deduction!) Employers with accountable expense reimbursement plans using the federal mileage rate may also make this adjustment at July 1st.

Elaine Sommerville will be reviewing some core accounting practices that churches should incorporate into their daily accounting lives at a webinar on June 14th hosted by Practical Resources for Churches. For registration information go to https://www.prcli.org/event/best-practices-for-church-accounting/?instance_id=351.

Best Practices for Church Accounting (2022-06-14) Best Practices for Church Accounting Tuesday, June 14, 2022 2:00 – 3:00 PM EDT Leader – Elaine Sommerville Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. For more than 30 years, she has focused her practice on churches and other nonprofit

Frank and Elaine Sommerville will be conducting an all day workshop on behalf of The Church Network on June 16th. For details and registration information go to https://tcninfo.com/aday. Come join us for lots of good information as well as some fun and laughter. Bring your questions and bring a friend who serves in church administration.

Display event - A Day With Frank & Elaine Sommerville Continuing Education Credit Individuals who register for CEUs and/or CPEs will be awarded these points if they qualify by attending the sessions.

The IRS has announced that the home COVID-19 testing kits are medical expenses that may be reimbursed by Flex-Med spending account, HRAs and HSAs. So keep that receipt, if you use one of these kits.

Interested in learning how your church or nonprofit organization can benefit from the employee retention credit? Catch Elaine Sommerville's presentation on this subject presented for Payroll Partners on Thursday, May 20th at 2:00 pm. Registration is free and is available at https://zoom.us/webinar/register/WN_yrp9PXXlS7iQnP-26fbvZA.

You are invited to join our free webinar: Employee Retention Credit – Is Your Church Leaving Money on the Table? After registering, you will receive a confirmation email about joining the webinar. Thanks and see you there! Payroll Partners is excited to partner with Elaine Sommerville, CPA and Shareholder with Sommerville & Associates to share new legislation regarding the Employee Retention Credit that can greatly benefit your Church. Greatly expanded, and more available than most believe, the employee retention cred...

Soon eligible families will begin receiving advance payment of their child tax credits that would normally appear on their 2021 Form 1040. In a political "spin" that this is getting money to these families faster, the action is proclaimed as a huge benefit to eligible families. However, most eligible families were already receiving their money earlier through reduced income tax withholding. In other words, the amount of income tax withheld was calculated taking into account the amount of the child tax credits that would be available on the person's tax return. Now, if any of these recipients have factored into their federal tax withholding the anticipated child tax credits, they will not have enough withholding to pay the tax reported on their 2021 Form 1040. In other words, if you receive the tax credit payment now, it will not be available to offset your tax on your return and you may have not paid in enough to cover your 2021 taxes. Receiving your child tax credit early does affect the amount of income tax you should have withheld, so make sure you do a new tax estimate to confirm you won't owe any taxes come April 2022!