Recently, the Internal Revenue Service (IRS) announced the new standard mileage rates to deduct vehicle expenses for the 2015 tax year. The latest rules impact individuals using a vehicle for business, charity, or medical and moving purposes. With the exception of the costs related to business, the standard mileage rates all stayed the same or were slightly down from 2014 due to lower gas and oil costs.
What is the the standard mileage deduction rate for 2015?
For 2015, the standard mileage rate increases to $0.575 for business miles driven, up from $0.56 in 2014 (reference: Internal Revenue Notice 2014-114). While the IRS expects fuel prices to be lower in 2015, an annual study indicated higher fixed and variable costs for operating an automobile, including depreciation, insurance, repairs, tires, and maintenance.
The rate will be $0.23 per mile for medical or moving purposes, down $0.005 from 2014, and $0.14 per mile driven in service of charitable organizations. The medical and moving expenses are based on the lower expected price of oil, while the charitable rate is set by law.
How does the standard mileage rate deduction work?
Essentially the standard mileage rate deduction is for instances in which you drive your personal car for business, medical reasons, or in support of a charitable organization. The mileage rate deduction is claimed as an itemized deduction on your tax return if you are itemizing for the year. Remember, you can either itemize deductions or take the standard deduction.
Can I deduct all of my vehicle costs?
No, you cannot claim the commute from your home to your normal place of business. However, you can claim the miles traveled from your office to a client site. It’s important to also note that the business mileage rate may not always be the most tax advantage method for claiming your vehicle costs. Rather, claiming the actual expenses can yield greater tax savings. To do this, the taxpayer must maintain an accurate and detailed mileage log of business, personal and commuting mileage as well as all of the costs for operating the vehicle.