Keeping up with vehicle mileage is not something that any of us love. However, it is a necessary evil if you want to deduct your business mileage on your taxes. This is something that those in the Atlanta real estate industry typically pay close attention to because if there is one thing we tend to do a lot of, it is driving from community to community.
Equifax Finance Blog tax specialist Eva Rosenberg recently demystified the mileage rates in her article 2012 Standard Mileage Rate: How It Affects Your Business Vehicle. If you are looking for a few tax tips, here they are:
The IRS released the new mileage rates for the business use of your car several times this year. Here’s the breakdown:
- From January 1 – June 30, 2011, the mileage rate was 51 cents per mile.
- From July 1 – December 31, 2011, the mileage rate is 55.5 cents per mile.
The rate for moving and medical mileage increase to 23.5 cents per mile from 19 cents. Charitable mileage stays the same, at 14 cents.
If you use your car for business or work, you probably already know that you can use either the standard mileage deduction or you may use actual expenses. When you use the actual expenses, you get to claim depreciation deductions, in addition to the insurance, registration fees, repairs and fuel costs.
Rosenberg points out that may people don’t know that the standard mileage rate has depreciation built right into it. When you sell the car, people think they don’t need to take depreciation into account. Wrong.
She suggests using the table here on the Small Business Taxes & Management site to determine how much depreciation you used each year, based on the total number of business miles you reported on your tax returns.
Her article on the Equifax Finance Blog goes into a lot more detail, so if you drive a car for work, check it out. Let us know what you learned!