Loan and Equity Help

The IRS mileage rate as of January 2009 can be used to determine how much you should be allowed to claim as a deductible expense for operating a car or vehicle for business use, for medical use or for moving purposes.

Well, that means the IRS mileage for driving a car for business use is today calculated at 55 cents/mile driven.

On the other hand, this amount drops to twenty-four cents/mile driven for any moving and medical purposes. It’s okay for you to claim deduction of fourteen cents per mile driven from any charitable organizations.

Since the rate of fuel creeping up again, claiming for deductible expenses for car use means the IRS mileage rate could prove comfortable for lots of people.

You should keep in mind that there are 2 ways to count deductible car costs when you’re counting your very own deductible expenses and factoring in the IRS mileage rate throughout the tax year.

The first is the IRS mileage rate and it’s by far the simplest method. The amount of 55 cents per mile driven for business reason calculated by basing estimates of the costs of running a vehicle.

For the vast majority of people using the IRS mileage rate can help to reduce your tax liability and increase the amount you’re potentially likely to claim in deductions.

However the alternative option for some business people is to calculate the actual expenses of operating a vehicle throughout the year. It means keeping an exact log book to note the whole miles driven. That is also means keeping your receipts for maintenance cost and fuel as well as servicing. Along with any routine maintenance or repairs that may arise thru the year, so that insurance costs and registration should be included.

It can be burdensome on the paperwork side when you noting so many costs throughout the year, so that many people like to simply use 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.

You may speak to your accountant whether you should take advantage of the IRS mileage rate or the actual cost basis or keep running cost of your total cost for 3 months and then multiply that amount by four so that you will get estimation of how much you can claim in a year. If you’re unsure of which way to proceed, call the IRS and they’ll be able to assist you with any questions.