ABOUT BEQUESTS

You may be looking for a way to make a significant gift to help further the mission of your favorite charity. A bequest is a gift made through your Will or Trust. It is one of the most popular and flexible ways that you can support the cause that matters the most to you.

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CHARITABLE GIFT ANNUITY

A charitable gift annuity is a great way to make a gift to your favorite charity. With this vehicle, you can gift your cash or property to your favorite charity and they will promise to make fixed payments to you for life at a rate based on your age.

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IRA CHARITABLE ROLLOVER

An IRA rollover allows people age 70½ and older to reduce their taxable income by making a gift directly from their IRA.

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Sunday February 16, 2020

Washington News

Washington Hotline

IRS Publishes 2020 Business, Moving, Medical and Charitable Mileage Rates

In Notice 2020-5, the IRS announced mileage rates for use in computing deductability in 2020. The 2020 mileage rate for business is 57.5 cents per mile. The rate is 17 cents per mile for moving and medical travel. For qualified charitable travel, the rate is 14 cents per mile.

Business mileage for employees was previously deductible as a miscellaneous expense. Miscellaneous expense deductions were permitted if they were over 2% of adjusted gross income. However, the Tax Cuts and Jobs Act (TCJA) repealed miscellaneous expense deductions, including the employee business mileage deduction.

Because employee business mileage is not deductible, most employers reimburse their employees for mileage. The employer must be able to show the mileage was an “ordinary and necessary” business expense. Employees should record the date, miles driven, the start and end locations and how the travel relates to their job responsibilities. Reimbursements in 2020 are permitted at a rate of 57.5 cents per mile.

Moving and medical mileage were also affected by the TCJA. Moving mileage is generally not deductible for most taxpayers. An exception is available for active duty military who move due to a permanent change of station. They may deduct 17 cents per mile.

Medical travel is deductible, but subject to a 7.5% floor. If the total medical expenses exceed 7.5% of adjusted gross income, the taxpayer should record the date, miles driven, start and end points and the medical purpose of each trip. It may be helpful to retain receipts to document that medical purpose.

Charitable travel is deductible at 14 cents per mile. Once again, “reliable written records” should include the date, miles, start and end points and the charitable purpose of each trip. Taxpayers will need to itemize to take their mileage and other charitable deductions.

The IRS offers specific guidelines on IRS.gov for deducting charitable travel. The charity work must be real and substantial throughout the trip. Taxpayers may not deduct mileage they have only nominal duties. They may not deduct the value of their time or services. Some types of travel do not qualify. Taxpayers may not deduct their mileage if a significant part of the trip involves recreation or vacation.

Published January 3, 2020
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