Under current IRS rules, you can deduct a certain amount in mileage rates if you are using your vehicle for business reasons. Every year, the IRS publishes a list of the current standard mileage rates and the amount you can deduct on your taxes.
Let’s look at the standard mileage reimbursement rate and the types of mileage that are tax-deductible.
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How Much is the Current Standard Mileage Rate?
The current standard mileage rate is calculated through an annual study of businesses, where the fixed and variable costs of operating a vehicle for business is calculated.
For the current tax year, you can claim the standard mileage rate of 57.5 cents for every business mile driven.
What Mileage is Tax Deductible?
As well as the 57.5 cents for business miles driven, there are other types of mileage that are also tax-deductible. These are for medical miles driven and miles driven during charity work.
The standard mileage rate for medical miles is 17 cents per mile driven, and for charity work, the mileage rate is 14 cents per mile driven. All types of mileage have seen a slight increase in the deduction.
The only types of miles that can be deducted are those where you’ve used a personal vehicle for charitable, business, or medical purposes.
Can I Use Standard Mileage Rate and Actual Expenses?
The IRS offers two ways in which you can claim a tax deduction for mileage. You can use the standard mileage reimbursement rate or your actual expenses.
Generally, the best option for you is actual expenses if you drive your car for business a lot. For example, an Uber driver would most certainly use actual expenses because their car is their primary business expense.
Another example may be someone who only drives for a couple of hours per week when they meet their clients. The miles driven may be so low that it’s simply not worth claiming for actual expenses since there will be no gain in the amount you can have refunded.
Actual expenses consider things like oil and tire changes, as well as vehicle depreciation. This requires more work as you’ll have to keep all the relevant sales slips.
For people who seldom use their personal vehicle for business reasons, it’s better to stick to the standard mileage rate.
How to Claim the Mileage Tax Deduction
When you file your taxes online, the platform will ask you several questions. The online program will help you claim the mileage tax deduction and fill out the appropriate forms.
The accuracy of your return, when you use online tax filing, is guaranteed. You can file your return as early as possible, so you get your refund faster.
Do you want to get the most out of your mileage rates?
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