Every business owner, far and wide, cross their fingers, pace a few paces and spend some quality time in stress while waiting to hear what's coming down from the IRS for the new year. If there is room for change, the IRS will find it!
New rules and regulations set by the IRS for business deductions on vehicles have been announced. As businesses are gearing up for 2014, the more information available the more prepared business owners will be when filing next year.
Starting January 1, 2014, the IRS has set new standard mileage rates for vehicles, including vans, pickups, panel trucks and of course cars.
These mileage rates are used to calculate deductible costs for business use, medical, charitable and moving purposes. Each having their own specific guidelines for their own specific purposes.
- For business miles driven -- 56 cents per mile
- For moving or medical purposes -- 23.4 cents per mile
- For charitable organization purposes -- 14 cents per mile
Please note: The charitable rate is based on statute. Business, moving and medical have decreased one half cent from 2013.
What Are These Rates Based On?
These rates are based on an annual study of fixed and variable costs for operating an automobile. Medical and moving are only based on the variable costs and not fixed.
Are There Other Options?
Yes, a taxpayer has the option to calculate the actual costs for using a vehicle rather than going by the standard mileage rates. Keep in mind, a taxpayer cannot use the business standard mileage rate after using any depreciation method under MACRS (Modified Accelerated Cost Recovery System).
A taxpayer may not use the business standard mileage rate after claiming a Section 179 deduction for a vehicle. Also, the business standard mileage rate may not be used for more than four vehicles, simultaneously.
What Are The Requirements for Using the Standard Mileage Rate?
For the above mentioned requirements as well as other requirements, the taxpayer should refer to Rev. Proc 2010-51. Also, retain a copy and read: Notice 2013-80 which contains the standard mileage rates along with the amount a taxpayer Must Use to calculate reductions.
Notice 2013-80 also covers the depreciation taken under the business standard mileage rate and the maximum standard automobile cost a taxpayer may use in figuring out allowances under fixed and variable rate plans.
The IRS and/or Congress are constantly changing, tweaking or altering tax breaks and/or penalties when it comes to small and large businesses alike. If you are preparing your own taxes, it is highly recommended you read up on all possible changes coming down the pike.
How Turbo Tax Can Help You Get the Deduction
When you file your taxes with TurboTax, you can be insured that you are going to be able to get you a tax deduction for business mileage if you qualify. Turbo Tax is able to recommend you with the best choices and show you which deductions and credits you qualify for.
If you try their free tax refund calculator, you can even see just how large your refund is going to be before tax season even arrives. Additionally, keep in mind that if you file with Turbo Tax you will not need to know the tax law or which tax schedules to fill out because they put your tax information on all the appropriate tax forms