Effective July 1, 2008, the standard mileage rate deductible for Business purposes increases from the current 50.5¢ per mile to 58.5¢ per mile. That can add up to a significant tax deduction but you have to keep written records that can prove the business purpose for miles claimed.
If you only average 100 miles a week (5,200 miles per year), that would give you approximately $3000 worth of deductions per year that could lower your tax bill about $750 at a 25% marginal tax rate. Depending on the number of business miles and your circumstances, the deduction and tax benefit could change.
If you forget to note the mileage for a particular trip, you can easily calculate by using the Google Maps or Mapquest features for directions which will calculate the mileage. For frequently used destinations, just keep a list of the roundtrip mileage and you don’t have to note the odometer start/end mileage readings.
You also need to keep track of the ALL the miles put on the vehicle(s) from January 1 through December 31. The easiest way to do this is by noting your odometer reading at the end of each year and then you only need keep track of actual business miles (also, keep track of “commuting” miles if you regularly commute to a worksite as an employee).
Also, effective July 1st, 2008 for personal deductions:
The medical (e.g., doctor visits) and moving mileage rates are increasing to 27¢ per mile.
The mileage rate for charitable purposes remains at 14¢ per mile.
Remember, track those miles! You’re going to continue paying for the high price of gas regardless. For a little more effort, why not have the IRS help offset some of your increased fuel costs? The standard mileage deduction takes the place of the actual deductions (gas, repairs, insurance, depreciation on the vehicle, etc.) and it keeps you from having to keep back up receipts if you choose to go this route.
Best regards,
José A. Alvarez
[email protected]
