Katrina Relief Bill Signed by Bush

President Bush recently signed a bill containing tax relief provisions for those affected by or volunteering to help with relief from Hurricane Katrina. While many of these provisions will have more effect in my old hometown in Mississippi, there are some provisions that will help us in Washington who help personally or financially.

The main provisions that affect us outside of the Katrina devastation involve new breaks for contributions. The limits on contributions as a percentage of income are lifted for the remainder of 2005.

Another nice break for anyone who has traveled to affected areas to give relief is the increased mileage deduction for hurricane relief. As I've written before, the oddity is that charitable miles are a 14 cent deduction, while business miles apparently cost 48.5 cents. This bill, however, increases the charitable mileage deduction for hurricane relief efforts to 70% of the business rate. That should come out to about 34 cents per mile - a nice bump from the regular rate.

Quite a few people have asked if my family and friends were affected by the hurricane. While everyone I know is safe, there was some pretty serious devastation in my old hometown of Hattiesburg, Mississippi. My old high school caught a good bit of the blow - here are some pictures if you're interested.

For more details on the tax bill, click here.

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Your Estimate Payment May Be Lost!

Did you make an estimated tax payment in September? You might have to do it all over again!

September 11th is just not a good day for the federal government. On that date two weeks ago, there was apparently an accident on the San Mateo bridge involving an truck transporting estimated tax payments to the IRS lockbox. The payments were blown all over the bridge and into the bay. The IRS thinks it lost between 30,000 and 46,000 estimate payments in the accident.

These payments were those made from residents of western states, including Washington and Oregon. If you made a payment before September 11, watch your bank statement or online banking system to see if it clears. If you see nothing by September 30, the IRS would like you to call them at 800-829-1040 for further instructions.

Any underpayment penalties will be waived for payments they receive late because of this accident. That's great, but another issue that strikes me is the opportunity for identity theft with all these payment checks blowing around. As always, keep a close eye on your bank account to make sure things look right.

https://www.wscpa.org/wscpa/ShortForm/050923/0923sf3.htm

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IRS Realizes Gas Price Increasing

With the recent spike in fuel costs, the IRS has increased their standard mileage rate for the last four months of the year. The new rate as of September 1 will be 48.5¢, up from the 40.5¢ rate set for January 1.

The standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

But the really big news? Charitable mileage can still only be deducted at 14¢ per mile. What's up with that? The rate hasn't increased for years. If any one can point me to the charitable gas station where I can fuel up that cheaply, please drop me an email.

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