The IRS Mileage Rate can be used to operate a vehicle or car for medical use or moving purposes, even for business use. Since January 2009, the IRS mileage rate can be used to determine how much you should be allowed to claim a deductible expense.
With the price of gasoline slowly creeping up again, making the most of claiming for removing expenses for car use means the IRS mileage rate could prove very suitable for lots of folks.
When you are determining your own deductible expenditures and you are factoring in the IRS mileage rate all the way through the tax year, you must remember that there are 2 ways to calculate deductible vehicle costs.
For most people using the IRS mileage rate can help them reduce their tax liability since it increases the total amount they are potentially likely to claim in deductions.
However another option for many business people is to calculate the real expense of the operating a car all the way through the year, which means keeping an accurate log book to record all miles driven.
It also means keeping all your receipts for fuel or servicing and maintenance costs. Registration and insurance costs should also be included, along with any other routine maintenance or repairs that may arise through the year.
Noting so many expenses throughout the year can be a bit troublesome on the paperwork side of things, and a lot of people prefer to only apply 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.
If you are doubt whether you should use the actual cost basis or the IRS mileage rate, the best way is to speak to your accountant.
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