The IRS Mileage RateLooking for the IRS mileage rate? Should you use it?This page answers all your questions!First of all, what is the IRS mileage rate? Simply put, it is a standard IRS mileagerate for your car expenses. It is an optionaland simplified way of figuring the automobile expensededuction on your tax return.Each year, the IRS conducts a study of fixedand variable expenses to determine this rate.Obviously, the price of gas is an importantfactor in the study. For more information onhow the IRS determines the standard IRS mileagerate, see
Who determines the IRS mileage rate?
With the soaring gas prices we've seenlately, it is not a surprise that the IRSmileage rate has increased!
IRS Mileage Rate Information:
Important:Why are there two rates for 2005 and 2008? During those years, gasoline prices jumped up sharply. If you drove a car during those time period, you probably don't need to be reminded of that! In the interest of fairness, IRS raised the business mileage rate. In September of 2005, the business mileage rate rose by 8 cents per mile from the prior rate that had been in effect for that year. In fact, this is the greatest mileage rate increase seen to date. The moving and medical mileage rate rose by 7 cents per mile. In 2008, the IRS made another adjustment to the mileage rate for that year. In August of 2008, the business mileage rate and the moving and medical mileage rate both rose by 8 cents per mile. Well, with gas pricing prices going up and down, it is at least good to know that the IRS is trying to stay on top of the game!This was of course a welcome break for taxpayers, but it also somewhat complicates the mileage expense calculation for that tax year. The solution, however, is simple: For example, for 2008, simply determine your mileage for January through June and for July through December of 2008. Then multiply the miles driven for each period with their respective mileage rate.
Using the IRS Mileage Rate Method:
Note: When using the IRS mileage rate method, keep in mindthat the IRS mileage rate includes all costs for operating the car,including gas, wear and tear, depreciation, etc. Thestandard IRS mileage method does notinclude parking and tolls; you may claim thesedeductions on your tax return in their separatecategories. You should also know that not every taxpayercan use the standard IRS mileage rate.More on this a little later in these pages.
Now that you know a little more about the IRS mileage rate method, you might still have questions. Perhaps you are wondering whether or not you qualify for the standard IRS mileage rate. Also, although the IRS mileage rate method is simple to use, some people find that they are better off not using it. Fore more information, see: Should I use the standard IRS mileage rate method? If you are a subscriber to the Biztax eGazette (see link on navigation bar), I will let you know when the IRS mileage rate changes. |
