IRS Mileage Rate
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.
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.
When you're calculating your own deductible expenses and you're factoring in the IRS Mileage Rate throughout the tax year, you should keep in mind that there are two ways to calculate deductible vehicle costs.
The first is the IRS Mileage Rate and it's by far the simplest method. The figure of 55 cents per mile driven for business use was determined by basing estimates of the fixed and variable costs of running a car.
However the alternative option for some business people is to calculate the actual expenses of operating a vehicle throughout 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.
Recording so many costs throughout the year can be a little burdensome on the paperwork side of things and so many people prefer to simply 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.
The best way to determine whether you should use the IRS Mileage Rate or the actual cost basis is to either speak to your accountant or try to keep a running cost of your total expenses for a full three months and then multiply that figure by 4 to give you an estimate of how much you'll be able to claim in an entire year. If you're unsure of which way to proceed, call the IRS and they'll be able to assist you with any questions.
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