Every year as tax time rolls around, people scramble to find the most deductions possible to claim on their tax return. One deduction that is often overlooked, or not realized to the full potential is the mileage deduction. The Internal Revenue Service (IRS) allows mileage deductions for business, moving, medical and charitable purposes.
Mileage Deducted for Business Purposes
The current business mileage rate is 55 cents per mile. (Be sure to check the IRS website, as adjust this amount yearly depending on the price of fuel and other economic factors.)
Business mileage may be deducted for several reasons including:
- Traveling to a client or customer office
- Going to a business meeting away from the home office
- Going to a temporary workplace
- Traveling among several offices within a given region
Mileage Deducted for Medical Expenses
The current medical expense mileage deduction is 24 cents per mile. (This figure may also be adjusted annually.) The medical expense deduction may be taken when:
- Traveling to or from a place of medical care
- Transporting someone else to or from a place of medical care
Mileage Deduction for Moving Expenses
The current moving expense mileage deduction is also 24 cents per mile. The moving expense mileage deduction must meet one of two criteria. They are called the time and distance test.
- The time test states that the person must work at least 39 weeks per year for the first two years (78 weeks over the first 24 months) in that new location.
- The distance test stipulates that the new home be at least 50 miles from the place of employment.
Mileage Deduction for Charitable Organizations
The mileage deduction for charitable organizations is fairly straight forward. A person may deduct 14 cents per mile for travel to and from a donation center, or when volunteering and performing work for a charitable organization.
Other Potential Deductions
Depending on the nature of your business a person may be able to deduct service and repair costs for their vehicles as well. Though it should be noted that unless they are in the transportation industry and own a fleet (five or more cars) one cannot deduct both repairs and mileage on their federal tax return.
Keep Solid Records
If a query letter is received from the IRS in regard to a mileage deduction, they are going to want to see some accurate records about where and when those miles were traveled. Hang onto a day planner, or download a schedule to a work computer and save it.
Hang onto the Records
The IRS suggests that a person hold onto their records for a period of between three and seven years. The range depends upon the deductions that claimed on an overall return.
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