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Recent Mileage Rate Changes

By: Angela Stringfellow

Mileage Rates between July 1, 2008 - December 31, 2008

Mileage Rate increases to 58.5 cents per mile.

The increased fuel costs have a major impact on individuals who use their vehicle for business use. The new standard business mileage reimbursement rate for July 1, 2008 - Dec. 31, 2008 is 58.5 cents. This rate is used as one option to compute deductible business related automobile costs. (If you are using your automobile for private and business use). The other method is tracking actual automobile costs, such as repairs, oil changes, and gasoline.

The mileage rate for vehicle use for computing medical or moving automobile expenses for July 1, 2008 - Dec. 31, 2008 will increase to 27 cents/mile.

The automobile use for charitable organizations is 14 cents/mile.

Remember that mileage rates are not the extent of your deductible expenses for the business use of your car. Remember to include parking fees and toll charges under deductible expenses for the business use of you car.

Mileage Rates between January 1, 2008 - June 30, 2008

Between January 1, 2008 and June 30, 2008, the optional standard mileage reimbursement rate used to calculate the deductible costs of operating an automobile were 50.5 cents per mile for business miles driven, 19 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.

This rate change for business miles compared to a rate of 48.5 cents per mile for 2007. The rate for medical and moving purposes for the first part of 2008 compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.

The standard mileage rate for business is calculated on an annual survey of the fixed and variable costs of operating a vehicle ; the standard rate for medical and moving purposes is based on the variable costs as concluded by the same study. Runzheimer International, an independent contractor, conducted the study for the IRS.

The mileage rate for charitable miles is set by law.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire or for more than four vehicles used simultaneously. Revenue Procedure 2007-70 contains additional information on these standard mileage rates.

Mileage Rates beginning January 1, 2009

The standard mileage rates for the use of the following vehicles: car, vans, pickup, panel truck:

55 cents per mile for business miles driven 24 cents per mile driven for medical or moving purposes 14 cents per mile driven in service of charitable organizations

The mileage rates for charitable purposes remain unchanged from 2008.

The business standard mileage rate may not be used for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Furthermore, business standard mileage rates cannot be used for vehicles used for hire or for more than four vehicles used simultaneously.

It is still possible to calculate the actual costs of using the vehicle, such as maintenance and gasoline, rather than using the standard mileage rates.

 

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Mark Frazier, CPA & Associates, Inc.
461 North High St., Chillicothe, OH 45601
Phone: 740.775.6882