Drivers all across the U.S. have enjoyed generally lower gasoline prices this year.
Those welcome pump prices, less than $3 in some places right now, are one of the reasons that the Internal Revenue Service has reduced the amount it will allow next year for tax-deductible roadway travel.
The 2013 standard per-mile deduction amounts are 56.5 cents for each business mile and 24 cents per mile for medical and moving travel. These are the amounts you use to calculate allowable deductible driving on your 2013 tax return due April 15, 2014.
But on Jan. 1, 2014, your driving will be worth a half-cent less on your taxes.
Miles driven for business purposes in 2014 will be deductible at 56 cents per mile. Medical and moving miles will be worth 23.5 cents per mile.
More than just gasoline is used in determining the mileage rates each year.
The IRS data also include “fixed and variable” automotive operating costs. This includes car insurance costs, as well as repair costs and vehicle fuel efficiency.
All these factors determine whether the IRS mileage allowance should go up or, as in 2014, down.
Lots of folks, including me, use the standard mileage rates. It’s just much easier to keep track of how far I travel to business meetings and then multiply each trip’s odometer results by the allowed rate.
You, however, might find it worthwhile to figure your deductible travel by keeping track of the actual costs of using your vehicle for business and/or medical trips or for moving.
In this case, you’d record the costs of gas, oil, registration fees, repairs, tires, insurance and the like.
Whichever method you use, the standard mileage rate or actual vehicle costs, you still can count parking fees and toll charges.
And in either deductible travel scenario, remember to keep very good records. If you can’t substantiate your business, medical or moving miles, an IRS auditor will disallow the deduction.
Charity rate remains the same
Every year the IRS also announces the standard deduction rate for miles you drive in service to an approved charity. The agency really doesn’t have to bother.
You can deduct your charity travel at 14 cents per mile. That rate never changes.
Tax law has locked this rate into the code, and it’s not subject to the inflation adjustment.
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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”