Q: Did the IRS make a mid-year adjustment for the mileage deduction in 2022?
A: Yes, the IRS increased the mileage deduction starting in July. A taxpayer can deduct 58.5, 18 and 14 cents per mile for business, medical and charity from Jan. 1, 2022 to June 30, 2022. Effective July 1, 2022, the deduction increases by 4 cents per mile for business and medical but charity remains the same.
Q: I filed for an extension but I was unable to pay $6,200 in taxes owed to the IRS. What should I do?
A: Any amount owed past the deadline of April 18, 2022 will incur interest and penalties. If you do not do anything, the IRS will send you a letter for a payoff or an installment plan. I recommend that you contact the IRS, explain your situation and work out a payment plan to minimize the IRS fees.
Q: An insurance agent is trying to sell me an annuity but I am not comfortable with this investment. What is an annuity?
A: If you are uncomfortable with any investment, do not invest. An annuity is a contract between you and the insurance company. A fixed annuity pays a fixed rate of interest for a specific period of time and a variable annuity allows you to select various investments. Annuities are not CD substitutes and are not life insurance policies. Variable annuities are expensive due to the layers of fees (management, administrative, mortality, etc.). If you cancel an annuity early, you will pay a surrender charge. Any gains from an annuity are taxed at ordinary rates and do not…
