IRS Mileage Rate
Increasing gas prices is a great cause for concern for vehicle owners, especially those who need to use vehicles on a regular basis. As part of the IRS’ incentives for business owners, all those who are required to use vehicles to carry out business activities are allowed to claim mileage deduction when they file their tax returns. Since the deduction is calculated on a per mile basis, you can expect to get a considerably large amount of tax deduction if you are putting a lot of miles on your vehicles.
The IRS mileage rate may not remain the same from year to year, and it changes according to certain circumstances that affect transportation costs, one of which is the rise of gas prices. In the beginning of 2011, the mileage rate was 51 cents per mile for those who use their vehicles for business-related travel. However, due to the increase of gas prices in spring, the IRS decided to implement a midyear mileage rate increase of 4.5 cents. This means that you will get a tax deduction of 55.5 cents for every mile that your vehicles travel while performing business-related duties. This new mileage rate can help you save more money if the vehicles that you are using are economical. The increase in the amount of tax deduction that you will be getting may be proportionately more than the increase in the actual cost of using your vehicles.
The IRS does not only offer tax deduction for those who use vehicles to perform business-related duties. Its mileage deduction is also applicable to people who need to use their vehicles for seeking medical treatment, moving, and charity-related travel, but the rate varies from one purpose to another. If you need to drive your vehicle to a medical facility or transport your belongings to a new home, you can claim a tax deduction of 23.5 cents for every mile traveled. This new rate is 4.5 cents higher than the previous rate that was implemented in the beginning of the year. The deduction for medical-related vehicle usage is especially helpful for people who need to travel to medical facilities frequently to receive medical treatment. If you are involved in charitable activities and you have to use your vehicle to perform charity-related duties, you are entitled to a tax deduction of 14 cents for every mile traveled.
To make sure that you will get the full mileage deduction that you are eligible for, you need to take the necessary measures to record the total mileage on your vehicles correctly. You should have a log book to record the odometer readings on all your vehicles on a regular basis. If your employees are the ones who are driving your vehicles, you can ask them to record the distances they travel every day in the log book. Once you have added up the total number of miles traveled in the tax year, you have to multiply it with the IRS mileage rate to come up with the total amount of tax deduction that you can claim.
Thursday, September 15, 2011
Mileage Deduction
If you own a business that requires you to use cars or other vehicles frequently, you will be significantly affected by rising gas prices. Fortunately, the IRS offers mileage deduction for people who need to operate vehicles for business purposes, and such deduction can help you save a considerable amount of money every year. Depending on circumstances, the mileage deduction rate can change from time to time, and you need to know the current rate to find out exactly how much tax deduction you are entitled to.
On the 1st of January, 2011, the business mileage deduction rate was raised to 51 cents per mile, which was a one cent increase from the previous year. In response to the increase in gas prices in the early part of the year, the IRS announced a midyear mileage deduction increase. As of the 1st of July, 2011, you can get a mileage deduction of 55.5 cents per mile. This increase in business mileage deduction will be especially beneficial to you if you are using economical vehicles. The mileage deduction that you will be receiving may be more favorable compared to the actual costs of operating your vehicles. The good thing is that the IRS offers the same mileage deduction rate for both economical and uneconomical cars.
To find out the amount of mileage deduction that you can claim, all you have to do is multiply the mileage deduction rate offered by the IRS with the total number of miles that your vehicles have traveled. Alternatively, you can deduct the actual costs that are incurred for operating your vehicles for business purposes, but this method may require more record-keeping. To make sure that you will get the most accurate calculations, it is essential that you get a log book to keep track of odometer readings on your vehicles. You can get your employees to report odometer readings on the vehicles they drive every day.
The mileage deduction rate of 55.5 cents per mile only applies to the use of vehicles for business purposes. There are also mileage deductions for other kinds of vehicle usage, including traveling for medical and charitable purposes, as well as moving. If you are using your vehicle when you are moving or you need to drive to a medical facility, you can get a mileage deduction of 23.5 cents per mile, which is 4.5 cents more than the rate that was offered in January, 2011. The deduction for traveling to a medical facility may be negligible for most people, but it provides substantial savings for those who need to seek regular medical treatment such as dialysis and chemotherapy. If you are driving for charitable purposes, you can get a mileage deduction of 14 cents per mile, which has been the same since 2009.
It took a long time for these generous increases in mileage deduction to be implemented by the IRS, but many vehicle owners are glad that they are finally here. With these increases, all those who use vehicles for business, medical, relocation, and charitable purposes can reduce their transportation expenses considerably.
On the 1st of January, 2011, the business mileage deduction rate was raised to 51 cents per mile, which was a one cent increase from the previous year. In response to the increase in gas prices in the early part of the year, the IRS announced a midyear mileage deduction increase. As of the 1st of July, 2011, you can get a mileage deduction of 55.5 cents per mile. This increase in business mileage deduction will be especially beneficial to you if you are using economical vehicles. The mileage deduction that you will be receiving may be more favorable compared to the actual costs of operating your vehicles. The good thing is that the IRS offers the same mileage deduction rate for both economical and uneconomical cars.
To find out the amount of mileage deduction that you can claim, all you have to do is multiply the mileage deduction rate offered by the IRS with the total number of miles that your vehicles have traveled. Alternatively, you can deduct the actual costs that are incurred for operating your vehicles for business purposes, but this method may require more record-keeping. To make sure that you will get the most accurate calculations, it is essential that you get a log book to keep track of odometer readings on your vehicles. You can get your employees to report odometer readings on the vehicles they drive every day.
The mileage deduction rate of 55.5 cents per mile only applies to the use of vehicles for business purposes. There are also mileage deductions for other kinds of vehicle usage, including traveling for medical and charitable purposes, as well as moving. If you are using your vehicle when you are moving or you need to drive to a medical facility, you can get a mileage deduction of 23.5 cents per mile, which is 4.5 cents more than the rate that was offered in January, 2011. The deduction for traveling to a medical facility may be negligible for most people, but it provides substantial savings for those who need to seek regular medical treatment such as dialysis and chemotherapy. If you are driving for charitable purposes, you can get a mileage deduction of 14 cents per mile, which has been the same since 2009.
It took a long time for these generous increases in mileage deduction to be implemented by the IRS, but many vehicle owners are glad that they are finally here. With these increases, all those who use vehicles for business, medical, relocation, and charitable purposes can reduce their transportation expenses considerably.
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