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.
However this figure drops to 24 cents per mile driven for any medical or moving 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 technique. The sum of 55 cents per mile driven for business purpose was determined by basing estimates of the rate 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 includes keeping the whole receipts for maintenance costs and fuel. Registration and insurance costs should also be included, along with any other routine maintenance or repairs that may arise through the year.
It can be burdensome on the paperwork side when you noting so many costs throughout the year, so that many people like 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.
A good way whether you must use the IRS mileage rate or the real cost basis is to either talk to your accountant or try to keep a running fee of your all expenses for 3 months and multiply that amount by 4 to give you an estimate of how much you will be able to claim thru the 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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