As we are all gearing up for filing taxes, it’s always good to know some of the increases that could help make a difference on our returns. As of January 1, the standard mileage rates for all vehicles has increased by 1 cent.
Knowing just what is allowed when filing on mileage for business trips, charitable organizations, or medical needs could make all the difference in your returns.
Run Down on Mileage Increases for Cars/Vans/Pickups/Panel Trucks:
· Miles driven for business purposes = 56.5 cent
· Miles driven for medical or moving purposes = 24 cents
· Miles driven for charitable organizations services = 14 cents
· Both medical and moving rates have also gone up 1 cent per mile from 2012
The Standard Mileage Rate for Business:
This is based on an annual study consisting of fixed and variable costs for vehicle operations. All medical and moving rates are based on variable costs only.
· You have the option to either calculate the “actual” costs for using your vehicle or using the standard mileage rates.
· You may Not use business standard mileage rates after using any depreciation method that is under MACRS (Modified Accelerated Cost Recovery System) or after claiming a Section 179 for this vehicle.
· Also note, you may not use the business standard mileage rate for more than four vehicles simultaneously.
Rev. Proc. 2010-51 is available for all requirements for using a standard mileage rate for calculating business, charitable, moving or medical expenses.
Notice 2012-72 offers standard mileage rates, the amounts a taxpayer must use to calculate reductions, the basis for depreciation taken under business standard rates and the maximum standard auto cost taxpayers may use for allowances under a fixed or variable rate plan.
In A Nutshell:
This is a good time of year to collect all information needed to get the most out of your tax returns. You will find all forms available on the IRS website. If you have someone doing your filing for you, have all your receipts and other information available for their use. The IRS and tax rules and regulations change so quickly, if you are not on top of it, you could miss out on some excellent deductions for you and your business.
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