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.
On the other hand, this amount drops to twenty-four cents/mile driven for any moving and medical purposes. You’re permitted to receive deduction of 14 cents per mile driven from charitable organizations.
Since the rate of fuel creeping up again, claiming for deductible expenses for car use means the IRS mileage rate could prove comfortable for lots of 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 primary is the IRS mileage rate which by far the easiest method. The figure of 55 cents/mile driven for business use was calculated by basing estimates of the fixed plus variable costs of running a car.
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.
Somehow another choice for lots of business people is to reckon the real expenses of operating the car throut the year. It means keeping an exact log book to note the whole miles driven. It also means keeping your receips for fuel and servicing. Registration and insurance costs should also be included, along with any other routine maintenance or repairs that may arise through the year.
Many people prefer to use the calculation for the IRS mileage rate since it can be burdensome on the paperwork side by recording so many costs throughout the year. 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.
