Many people know that the business use of a vehicle can be deducted based on a standard mileage rate. What may surprise some people is that mileage driven for
charitable, medical, or business/employee moving purposes can also be deducted under a fixed rate per mile.
The standard mileage rates that went into effect January 1, 2014 for the use of a vehicle are:
- 56 cents per mile for business miles driven
- 23.5 cents per mile for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The business, medical, and moving expense rates went down one-half cent from 2013. The charitable rate is based on statute and does not change from year to year.
The standard mileage rate for business is based on both fixed and variable expenses of the vehicle. Fixed expenses include expenses such as depreciation and insurance; variable expenses include expenses such as gas, oil, and maintenance. The mileage rates for medical, moving, and charitable mileage is based only on variable expenses; fixed expenses for these purposes is not deductible.
Taxpayers always have the option of deducting the actual operating costs of their vehicles, but many choose to use the standard mileage rates due to the lower recordkeeping requirements. However, a log must still be maintained to establish the dates, purpose, and times of the mileage.
A taxpayer may deduct, as separate items, parking fees and tolls attributable to the use of the automobile for charitable, medical, or moving expense purposes. Interest relating to the purchase of the automobile and state and local personal property taxes are not deductible as charitable, medical, or moving expenses. However, interest on business use of a vehicle may be deductible and personal property taxes may be deducted as an itemized deduction for property taxes.
If you have any questions on how this applies to you, please feel free to give us a call.
Buzzkill Disclaimer: This post contains general tax information that may or may not apply in your specific tax situation. Please consult a tax professional before relying on any information contained in this post.