This article is about the second half of 2008 July 1, 2008 - December 31, 2008
This is a rate increase of 16%
IRS Commissioner Doug Shulman said, "We want the reimbursement rate to be fair to taxpayers."
AAA reports that the national unleaded average gasoline price has been above $4 for most of June, 2008. Gasoline is more expensive than last year by $1.09 per gallon at this point.
The middle of the year IRS adjustment lets Americans use the higher deduction amount from
July 1, 2008 through Dec. 31, 2008 instead of keeping track of all of the deductible costs of operating
a vehicle.
The IRS usually changes the rate just once a year.
The outrageous cost of gas costs prompted this middle of the year increase.
(I think it's not enough)
In an IRS press release Doug Shulman said:
"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile.We want the reimbursement rate to be fair to taxpayers."
2005, saw an increase by the IRS in the middle of the year, by 8 cents a mile.
The gasoline price hikes were in some part due to Hurricane Katrina.
The rest of the story:
You do have to keep mileage records for the IRS tax prep and differentiate between
business,
personal,
charity and
moving miles.
You can take a business vehicle tax deduction with receipts for all expenses or mileage deduction.
For 2008 business miles at $0.505 per mile (50.5 cents per mile)until June 30
For 2008 business miles at $0.585 per mile (58.5 cents per mile)July 1 - December 31, 2008
For 2008 charity miles are @ $0.14 per mile. No change
For 2008 moving and medical miles are @ $0.19 per mile,
as of July 1 till Dec.31 - 08, it will be $0.27 cents.per mile.
The charity, medical and moving mileage deductions are not as much of an advantage and for
most of
us it wouldn't as big an issue. So let's focus on business here a bit.
The business miles are often the best deduction and even though the
price
of gas is skyrocketing if you have a business that logs a lot of highway
miles
like I do at 50.5 cents per mile a nd then with the increase to 58.5 cents it still should be a better method for
2008. I would suggest keeping track by both methods so that at tax time
you can
do the math and decide which is the better.Use a log book to track the odometer readings each day.
Someone
told me how they recreated the mileage for one day when they forgot to log the
difference between personal miles and business. They went to a web site
that offers online maps and driving directions.
There are software programs that are very helpful for tax prep and many
people use them. I like to do all of the preliminary record keeping work and
trust my accountant for the details.
Some people think it's unnecessary to use an accountant because the
electronic filing and tax prep software is so easy to use. I'll have to look into it because it's surely worth the effort to learn about the
ease of use of the software
and decide if you want to
save the cost of the
accountant.
So using
software and e-filing is
another way to save money.
Try this site for more tax tips http://www.rc123.com/tax_information_links.html
You also have the option of deducting using a percentage method whereby
you have to save all receipts for gas, parking, registration, repairs etc.If you had a catastrophic year repair wise or had to park in a garage
everyday
that could warrant keeping all records and possibly using the
percentage
method.
Medical and moving allows a $0.19 per mile deduction and although I do
have a serious heart problem with 2 artificial valves and need constant
blood tests at my doctors office, it isn't very far. So for me n/a.
There are those who have to travel for dialysis or chemotherapy on a
regular basis and for them it is vital that they save the money using the
deduction.
The charity deduction if fixed by government regulation @ $0.14 . It could be an issue if you did it on a regular basis but again
you have to do the math.
This can be a make it or break it deduction and If you are self-employed and
just starting out in business for yourself you have to think about this right
away so that your records will be
accurate.
The mileage deduction amounts change every year so be sure to look it up before you start every new year just to know where you will stand deduction wise.
Good Luck!
Copyright © Roger Chartier 2008
Go to
The index of the tax articles on this site
TAX INFORMATION PAGE LINKS
for many more tax saving tips pages.
Notes: This is often referred to as the federal mileage rate., and the concern is about federal mileage reimbursement.
Federal mileage allowance is the topic. You ask, what is the federal irs mileage rate standard or IRS mileage rate reimbursement.
You do have to keep an irs mileage log.
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