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Definitions of IRS Mileage
By plrprousers | June 13, 2009
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.
Effectively this means that the IRS mileage rate for driving a vehicle for business purposes is now calculated at 55 cents per mile driven.
Somehow, this amount drops to 24 cents/mile driven for any medical purposes. You are allowed to obtain the deduction of 14 cents/mile driven in the service of any charity.
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 per mile driven for business use was determined by basing estimates of the fixed and 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 option for many business people is to evaluate the actual expenses to operate a car the whole 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.
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.
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.
Tags:irs,irs help,tax,tax relief,tax return
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