IRS Mileage Rates – and an Alternative

The IRS recently announced the new mileage rates for 2014:

• 56 cents per mile for business miles driven
• 23.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

In order for any of these rates to be claimed, you have to track miles and purposes. There are computer and phone apps that can help to make this simpler but in just about every situation, doing so is still a major pain.

This is probably a good time to remind everyone that tracking miles is not the only way to take vehicle expenses. You can also simply track to the actual costs and report these. If you typically use a debit or credit card for your fuel and other related vehicle expenses (repairs and maintenance for example) then this may be far simpler than the mileage tracking method. All you need to do is tabulate these figures at the end of each month or year, whichever is easiest, then use them for the vehicle expense.

Remember also that claiming vehicle expenses is far simpler and less likely to receive IRS scrutiny when it’s reported through your business entity on a separate return. Like most deductions on your business return, this is a safer place to claim the deduction and the rules are much more straightforward.

One way or the other, use of your vehicle should qualify as a deduction on your taxes in 2014 so if you’re not sure how to get the benefit, contact your tax professional for assistance and make sure to ask about the difference between the personal and business reporting.

By: Evan A. Nielsen (Licensed in California)

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