The IRS mileage rate as of January 2009 can be used to determine how much you should be allowed to claim as a deductible expense for operating a car or vehicle for business use, for medical use or for moving purposes.
Well, that means the IRS mileage for driving a car for business use is today calculated at 55 cents/mile driven.
However this figure drops to 24 cents per mile driven for any medical or moving purposes. You’re also allowed to claim the deduction of 14 cents per mile driven in the service of any charitable organizations.
With the cost of fuel slowly creeping up again, making the most of claiming for deductible expenses for vehicle use means the IRS mileage rate could prove very convenient for many people.
You should keep in mind that there are 2 ways to count deductible car costs when you’re counting your very own deductible expenses and factoring in the IRS mileage rate throughout the tax year.
The primary is the IRS mileage rate which by far the easiest technique. The amount of 55 cents per mile driven for business reason calculated by basing estimates of the costs of running a vehicle.
For the vast majority of people using the IRS mileage rate can help to reduce your tax liability and increase the amount you’re potentially likely to claim in deductions.
On the other hand, the alternative choice for many business people is to determine the real expenses of running a car thru the year. This means keeping an accurate log-book to record all miles driven. It also means keeping all your receipts for fuel or servicing and maintenance costs. Registration and insurance costs should also be included, along with any other routine maintenance or repairs that may arise through the year.
Noting lots of costs throughout the year can be difficult on the paperwork side of things and then lots of people like to use the calculation for the IRS mileage rate. However if you’re willing to put up with a little inconvenience of keeping receipts and calculating the actual costs, you may find that your deductions outweigh the amount handed automatically by the IRS mileage rate.
You may speak to your accountant whether you should take advantage of the IRS mileage rate or the actual cost basis or keep running cost of your total cost for 3 months and then multiply that amount by four so that you will get estimation of how much you can claim in a year. If you’re unsure of which way to proceed, call the IRS and they’ll be able to assist you with any questions.