SEARCH

IRS Announces Mileage Rates for 2020

Mileage rates adjust every year depending on the costs of operating a vehicle. People who are concerned about mileage rates are those that keep track of their miles when driving for business, moving, medical and charity.

Mileage Rates for 2020

Anyone who operates an automobile for business reasons will be slightly disappointed that the cost per mile has decreased half of a cent from 2019 to 57.5 cents per mile.

Those who drive for medical or moving purposes will be a bit more disappointed, as that mileage rate has decreased three cents, bring it to 17 cents per mile.

Charitable organizations can deduct 14 cents per mile, and this never changes year-to-year, as it is set by a statute.

What Mileage Deducting Taxpayers Should Know

Taxpayers need to know that under the Tax Cuts and Jobs Act, they cannot claim a miscellaneous itemized deduction for any travel expenses that are unreimbursed by their employer.. Taxpayers can also not claim a deduction for personal moving expenses, except members of the Armed Forces on active duty who moved under orders to a permanent change of station.

Taxpayers have a decision when they are filing their taxes. They can either use the actual costs of using their vehicle for business, medical or moving purposes or choose to use the mileage rates for actual miles driven.

Taxpayers CANNOT use the business standard mileage rate if they are using the depreciation method under the Modified Accelerated Cost Recovery System, or if they claimed a Section 179 deduction for that vehicle.

The business standard mileage rate also CANNOT be used for more than five vehicles used at the same time.

How Mileage Rates Are Decided

Mileage rates for business purposes are based on the annual fixed and variable costs of operating a vehicle during that year.

Mileage rates for medical and moving purposes are only based on variable costs.

Knowing What Is Best for Your Return

Mileage rates can lead to significant deductions if it is done correctly. Some taxpayers can take advantage of claiming the actual vehicle expenses over using the current mileage rates, but it can be difficult to calculate each one to figure out which is in the best interest of the taxpayer.

That’s why it’s a good idea to seek an experienced tax preparer. This person can help you file your tax return correctly, so you pay what you owe or get back as much as you should. Don’t risk under or overpaying your taxes. Turn to a tax expert who can help you.