Standard Mileage Rates To Go Down In 2010

The IRS announced the standard mileage rates for 2010 this week.  The standard mileage rate is the amount used to calculate the cost of using a personal vehicle for business, charitable or medical purposes.

Starting on January 1^st, the standard mileage rates will be:

Business: 50 cents per mile
Medical or moving: 16.5 cents per mile
Charitable: 14 cents per mile

The standard mileage rates are lower than the 2009 rates to reflect the decrease in the cost of gas.  The IRS studies the cost of operating vehicles to determine the appropriate rate to use for deducting car expenses each year.  If the cost of gas rises significantly during the year, such as it did in 2008, the IRS can do a mid-year increase in the standard mileage rates.

Taxpayers have the option of deducting either the actual cost of operating their vehicle or using the standard mileage rate.  However, the standard mileage rate can not be used for a vehicle if the taxpayer has deducted depreciation on the vehicle, or if they have taken the Section 179 deduction for that same vehicle.

The standard mileage deduction is beneficial for taxpayers because it reduces the amount of recordkeeping that needs to be done, but it can result in a lower tax deduction than the actual cost method for people who have purchased new vehicles.

Source: IRS Announces 2010 Standard Mileage Rate

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IRS Announces Mileage Rates for 2009

In the second half of 2008, the IRS increased the standard mileage rate to 58.5 cents per mile from 50.5 cents per mile for people who use their personal car for business use.  This was in response to skyrocketing gas prices earlier in the year.

Since then, gas prices have dropped dramatically.  Prices were as high as $4.10 in some states during the summertime, but have dropped to a national average of $1.90 in this last week in November.

I was wondering how the IRS would respond to the drop in prices.  After all the increase to 58.5 cents per gallon was based on prices that were twice as high as they are now.

Earlier this week, the IRS announced that the standard mileage rate for business use of your automobile in 2009 will be 55 cents per mile.  That’s still well above the beginning rate in 2008, so I think the new rate is very generous.

For home and online business owners who use their car for business purposes, the automobile deduction can really add up.  Make sure you keep a log of all of your business related trips, including the date, the total miles driven and the purpose of the trip.

You can find travel or mileage logs in any office supply store, or you can use your calendar or a spreadsheet to keep track of your miles.  The most important thing is to keep good and accurate records in case you are ever audited.

If you keep track of your mileage for medical or charity purposes, not that the standard mileage rate for medical purposes is 24 cents per mile, and the rate for charitable purposes is 14 cents per mile.

For more information on the new mileage rates, please visit ‘IRS Announced 2009 Standard Mileage Rates’.

IRS Increases Mileage Rates For the Remainder of 2008

In recognition of recent gasoline price increases, the IRS has raised the standard mileage rate for the final six months of 2008.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through December 31, 2008. The rate for the first half of 2008 is 50.5 cents.

The IRS normally updates the mileage rates once a year, but given the significant increases in gas prices this year, the IRS has made a special rate increase in the middle of the year.

Taxpayers may use the standard mileage rates to calculate the deductible costs of using their personal automobile for business, charitable, medical or moving purposes.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Whichever method you choose, it is important to keep track of your mileage to substantiate your deduction. Because the rates were increased in the middle of the year, it’s also important to keep track of the dates you use your vehicle for business to make sure the proper rate is used.

Standard Mileage Rate Going Up in 2008

The IRS just announced that the standard mileage rate will be 50.5 cents per mile in 2008.  This is up from 48.5 cents per mile in 2007.

If you’re not keeping track of your mileage, you need to start now!  These rates are higher than we’ve ever seen, so you should be keeping track of every business mile driven.

You can use a spiral notebook to keep track of miles, you can purchase a mileage log from any office supply store, or you can use my own mileage log, found here.