A new year is approaching, and that means the IRS is issuing guidance for the coming year. Even as you gather your 2013 information and prepare to file your taxes, it’s important to begin planning for next year. Looking ahead to 2014 can help you avoid pitfalls, and prepare you to do what you can to reduce your tax liability.
Unfortunately for those who use their cars for a variety of tax-deductible purposes, some of the mileage deductions have gone down.
New Mileage Rates for 2014
Starting on January 1, 2014, there will be new mileage rates for those who wish to take deductions for the use of their vehicles. The new rates are:
- Business miles driven qualify for a deduction of 56 cents per mile. It’s important to note that business miles driven do not include miles driven for a regular commute. These miles must be driven outside the the ordinary commute, for activities such as traveling to a meeting or running errands on behalf of the business.
- Medical and moving expenses have the same mileage deduction of 23.5 cents. It’s important to pay attention to ensure that you meet the basic qualifications for taking these deductions.
These new numbers represent a drop of 0.5 cents from 2013 levels. Clearly, inflation is not something that the IRS is concerned about — at least as it relates to the cost of using a car for these types of activities.
The mileage rate that is not changing in the new year is that used for charity. If you drive for charitable purposes, you can still take a deduction of 14 cents per mile. Rather than being adjusted regularly, this mileage deduction is set by law, so a change in the law has to be made to adjust this particular mileage count.
Calculating the Actual Cost of Using the Vehicle
You don’t have to use the mileage calculation to get a tax deduction for the use of your vehicle, however. It’s possible to determine the total cost of the use of your vehicle for these purposes and deduct that. However, this is an either-or proposition. If you decide to deduct the total cost of using your vehicle, you can’t deduct the mileage.
As always, it is vital that you properly document any deduction that you want to take. If you are deducting mileage, you need to keep a record of the miles traveled for each trip. Noting odometer readings can help, or just keeping a log of each trip. This is important, since the purpose of your trip matters. Make sure you clearly mark what each trip is for so that you can properly assign the right mileage deduction.
Even if you are calculating total cost to use your vehicle, instead of using the standard mileage deduction, you want to keep good records. Save your receipts, and make sure that you aren’t trying to count certain vehicles that are not allowed. If you have questions about the requirements, contact a knowledgeable tax professional who can help you work through your vehicle deduction options.