Posts Tagged ‘mileage rates’

Mileage Rates Will Be Reduced In 2016

Friday, December 18th, 2015
2016 Mileage Rates | Rea & Associates | Ohio CPA Firm

Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Read on to find out the 2016 mileage rates.

Drivers were able to get a little more money back for every mile driven in 2015, but next year’s road map tells a different story.

The IRS announced that most of the 2016 optimal standard mileage rates would either remain the same or would be lowered going in to 2016. Among the rates seeing a decrease, were the standard mileage rates for business use of a vehicle, which were reduced to 54 cents per mile – a decrease of 3.5 cents over 2015’s rate of 57.5 cents per mile.

Read Also: 5 Tax Deductions To Ease Your Business’s Tax Burden

How Are Optimal Standard Mileage Rates Determined?

Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Just be aware that you will not be allowed to claim both.

For example, if you have plans of claiming an accelerated depreciation on your vehicle, then you will not be able to claim the business standard mileage rate as well. If you are a business owner, you should also note that the standard rate is not available to fleet owners, or those who use more than four vehicles simultaneously. Additional details and rules can be found in Revenue Procedure 2010-51.

Different Rules For Different Road Trips

Here are some of the other common rates drivers should be aware of:

  • The miles you drive for medical or moving purposes will be calculated at 19 cents per mile driven.
  • Those driving their vehicles as a service to charitable organizations may calculate their deductions at 14 cents per mile driven.
  • The portion of your business standard mileage rate that will receive depreciation treatment in 2016 will continue to be 24 cents.

Also in its announcement, the IRS noted an adjustment to the standard automobile cost allowable under the fixed and variable rate (FAVR) plan, which considers the costs taxpayers incur by driving their own vehicles for work-related purposes. In 2015, standard automobile costs may not exceed $28,000 (not including trucks and vans), which is a decrease of $200 from 2015. The maximum standard automobile cost for trucks and vans, however, is $31,000 – an increase of $200 over the 2015 rates).

Travel For Tax Savings

If you use your vehicle for business don’t forget to track your mileage. Every mile you travel is an opportunity to realize real tax savings. A financial advisor can help you find these opportunities as well as many others.

By Lesley Mast, CPA (Wooster office)

Are you looking for ways to help you plan for the upcoming tax season? Check out these articles for some great tips:

Easy Year-End Tax Tips For Business Owners

How Long Should You Keep Financial Documents?

What Could Ohio’s Small Business Investor Income Tax Deduction Do For Me?

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New Year, New Mileage Rates

Thursday, December 11th, 2014

Every mile you drive for business will be worth a little more next year, according to a recent IRS announcement. Beginning Jan. 1, 2015, the optional standard mileage rate for those calculating the deductible costs of driving for business will be 57.5 cents, which is up from 56 cents.

Based on a study of the fixed and variable costs associated with operating an automobile, the standard mileage rates take into consideration vehicle depreciation, insurance, repairs, maintenance, gas, etc. However, if you don’t intend on tracking your mileage, you also have the option of claiming deductions based on the actual costs of using your own vehicle rather than the standard mileage rates. Just be aware that you will not be allowed to claim both.

For example, if you have plans of claiming an accelerated depreciation on your vehicle, then you will not be able to claim the business standard mileage rate as well. If you are a business owner, you should also note that the standard rate is not available to fleet owners, or those who use more than four vehicles simultaneously. Additional details and rules can be found in Revenue Procedure 2010-51.

While the standard mileage rate for the business miles you drive will increase in 2015, those who use their vehicles for medical or moving purposes will see a reduction of half a cent in their mileage rates. Starting Jan. 1, the miles you drive for medical or moving purposes will be calculated at 23 cents per mile driven. And those driving their vehicles as a service to charitable organizations may calculate their deductions at 14 cents per mile driven.

Also in its announcement, the IRS noted an adjustment to the standard automobile cost allowable under the fixed and variable rate (FAVR) plan, which considers the costs taxpayers incur by driving their own vehicles for work-related purposes. In 2015, standard automobile costs may not exceed $28,200 or $30,800 for trucks and vans.

Do you use your vehicle for business? Make sure you track of your mileage. Every mile you travel is an opportunity to realize real tax savings. Our expert financial advisors can help professionals like you find opportunities you never even knew existed. Email Rea & Associates today and start the New Year out right.

By Lesley Mast, CPA (Wooster office)

 

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What Should You Know About 2014 Standard Mileage Rates?

Tuesday, January 14th, 2014

Do you use your personal vehicle for business purposes when you’re on the clock? Or do you use your vehicle medical, moving or charitable purposes? If so, did you know that you can claim a tax deduction on the mileage you rack up?  (more…)

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