Higginbotham Companies, Inc.

Let’s start off this month with an announcement Internal Revenue Service Center (IRS) made recently for business owners and applicable taxpayers.  For the final six months of 2022, the standard mileage rate will increase to 62.5¢ per mile. Taxpayers may use the optional standard mileage rate to calculate the deductible costs of operating an automobile for business and certain other purposes.  Also, there will be an increase to 22¢ per mile for medical or moving expenses.  Now, I want to change direction and discuss, briefly, the child dependent circumstances.  When claiming a child as a dependent and the parents are divorced, separated, or live apart certain rules need be followed.  Only one person can claim the tax benefits related to a dependent child, who meets the qualifying child rules.   Parents can’t share or split up the tax benefits, for the child, on their respective tax returns.  It’s important that each parent understands who will claim their child on their tax return.  If two people try to claim the same child, on different tax returns, it will slow down processing time since the IRS will not issue any refunds until they determine which parent’s claim takes priority.  Normally, the custodial parent will meet the qualifying child due to the residency test.  There’s also arrangement where both parents have the child equally, then the higher adjusted gross income parent would be determined as the appropriate taxpayer to claim the child.  However, the non-custodial parent may be eligible to claim the child if the custodial parent provides a release of dependency exemption Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, and the non-custodial parent must include a copy of this completed form with their tax return to claim the child.  Furthermore, this also applies to some tax benefits, including the child tax credit, additional child tax credit, and credit for other dependents. It doesn’t apply to other tax benefits, such as the earned income credit, dependent care credit or head of household filing status.  A thorough understanding of the rules are required, appropriate evaluation, and clear communications between parents is necessary.  The next item of importance this month is where the IRS announced they want to hire 470 revenue agents.  These positions will require knowledge in auditing or examining individual and/or business taxpayers.  Throughout July, 2022, the IRS is holding a series of virtual information sessions for interested applicants. Visit IRS.gov for more information about the jobs, how to qualify and how to attend a virtual information session.  You’ll find most of the positions are located outside of Florida, but the annual income for most positions starts are $111,000. I guess this should provide insight as to what they are expecting to increase activity in the next year.  Be prepared to retain your receipts, records, and be able to justify your position on your tax return.  I hope everyone enjoyed the fireworks our community put on this year.  It was awesome and SUPER THANK YOU to everyone who contributed funds, sweat, and effort to make it happen!  This is just a brief overview. Further details and specific questions may be obtained by contacting your tax advisor or our office.  Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.