Standard Mileage Rates
Instead of deducting actual car expenses that are incurred throughout the year, the standard mileage rates allow taxpayers who use a vehicle for certain purposes to do so on a per-mile basis. Depending on the purpose of the transportation, there are different prices.
Because of this, the standard mileage rates vary depending on whether the vehicle is being used for work, charity, getting medical care, or moving for a job.
When it comes to claiming these uses of their own vehicles as a tax deduction, taxpayers must keep thorough records, including accurate mileage logs and/or receipts for the relevant expenses.
Business Use of a Taxpayer’s Personal Vehicle
A taxpayer may deduct unreimbursed employee expenses, including unreimbursed expenses related to business use of a personal vehicle as “miscellaneous itemized deductions” to the extent the total of such expenses exceeds 2% of his or her adjusted gross income. The costs must, however, fulfill specific requirements in order to be deductible. Because of this, expenses related to using a vehicle for business purposes must have been paid or incurred during the tax year for the regular and essential purposes of carrying out the taxpayer’s trade or business as an employee, provided the paid or incurred personal vehicle expenses meeting these three criteria are not reimbursed. The deductible personal vehicle expenses include traveling:
1. Between workplaces;
2. To meet with a business customer;
3. to travel from the taxpayer’s home to an alternate place of employment, such as a business meeting, or both.
The standard mileage rate for 2015 that can be used to deduct eligible personal vehicle expenses incurred while the vehicle is being used for work purposes is 57.5 per mile. A taxpayer may deduct any parking fees and tolls related to business that they paid while on deductible business travel in addition to using the standard mileage rate. Parking fees, on the other hand, are considered commuting costs and are not deductible for taxpayers when they are paid to park their car at their usual place of business.
Use of a Personal Vehicle for Charitable Purposes
Any unreimbursed out-of-pocket costs directly connected to using a personal vehicle to provide services to a charitable organization, like the price of gas and oil, may be written off by the taxpayer as a charitable contribution. Alternately, a taxpayer may choose to use the standard mileage rate that applies to the use of a personal vehicle for charitable purposes. The standard mileage rate for using a personal vehicle for charitable purposes by a taxpayer in 2015 is 14 cents per mile.
Parking costs and tolls are also deductible by the taxpayer, just like other types of mileage, whether actual costs or the standard mileage rate are used.
Travel costs incurred by a taxpayer while rendering services to a charity are a relevant topic. Furthermore, a taxpayer may generally claim a charitable contribution deduction for travel costs necessary while away from home providing services for a charitable organization, provided there is no significant element of personal pleasure, recreation, or vacation in the travel, and the taxpayer must be on duty in a genuine and substantial sense throughout the trip.
Personal Vehicle to Obtain Medical Care
In addition, a taxpayer may write off medical and dental costs to the extent that their total exceeds 10% of adjusted gross income for taxpayers under 65 or 7.5% for taxpayers 65 and older. In 2017, regardless of the taxpayer’s age, medical and dental expenses will only be deductible if they exceed 10% of the taxpayer’s adjusted gross income. Until then, the threshold for taxpayers 65 and older will remain at 7.5%.
The amounts paid for transportation to obtain medical care for the taxpayer, a spouse, or a dependent are considered vehicle expenses that a taxpayer may include as medical and dental expenses. A taxpayer may also include as medical and dental expenses those transportation costs incurred:
1. By a parent who must accompany a child needing medical care;
2. by a nurse or another person who is able to give an inebriated patient who is unable to travel alone the injections, medications, or other treatment they need to receive while seeking medical attention.
3. for routine visits to see a dependent who is mentally ill, if such visits are suggested as a part of the dependent’s treatment.
A taxpayer is allowed to deduct medical travel expenses at the standard medical mileage rate or include out-of-pocket vehicle expenses, such as those for gas and oil, when using a personal vehicle for such medical purposes. The standard medical mileage rate in 2015 is 23 cents per mile. In addition, regardless of whether actual expenses or the standard mileage rate are used, the taxpayer may write off any parking fines or tolls.
Use of a Taxpayer’s Personal Vehicle to Move
Every year, a large number of taxpayers relocate, frequently due to new employment that entitles them to a deduction for their moving expenses incurred by vehicle. As a result, certain moving expenses incurred within a year of the date a taxpayer first reported to work at a new main job location may be subtracted from gross income provided the new location is at least 50 miles away from the taxpayer’s previous residence. The costs of traveling to a new home, including lodging while on the way, are included in the list of deductable moving expenses.
To the extent that the move qualifies for the deduction of moving expenses, a taxpayer who uses a personal vehicle to move themselves, their household members, or their personal effects to a new residence may deduct those costs. The taxpayer is allowed to write off any parking fees and tolls paid in addition to any actual vehicle expenses incurred, like gas and oil costs or standard mileage rates.
The standard mileage rate for moving expenses in 2015 is 23 per mile.
