Deducting Mileage – Not Just for Businesses!

Rather than keeping track of the actual cost of operating a vehicle, employees and self-employed taxpayers can use a standard mileage rate to compute their deduction related to using a vehicle for business. But you might also be able to deduct miles driven for other purposes, including medical, moving and charitable purposes.

Current Deduction Rates

The rates vary depending on the purpose and the year:

Business: 54 cents (2016), 53.5 cents (2017)

Medical: 19 cents (2016), 17 cents (2017)

Moving: 19 cents (2016), 17 cents (2017)

Charitable: 14 cents (2016 and 2017)

The business standard mileage rate is considerably higher than the medical, moving and charitable rates because the business rate contains a depreciation component. No depreciation is allowed for the medical, moving or charitable use of a vehicle.

In addition to deductions based on the standard mileage rate, you may deduct related parking fees and tolls.

Other Applicable Limits

The rules surrounding the various mileage deductions are complex. Some are subject to floors and some require you to meet specific tests in order to qualify.

For example, miles driven for health-care-related purposes are deductible as part of the medical expense deduction. But medical expenses generally are deductible only to the extent they exceed 10% of your adjusted gross income. (For 2016, the deduction threshold is 7.5% for qualifying seniors.)

And while miles driven related to moving can be deductible, the move must be work-related. In addition, among other requirements, the distance from your old residence to the new job must be at least 50 miles more than the distance from your old residence to your old job.

Other considerations

There are also substantiation requirements, which include tracking miles driven. And, in some cases, you might be better off deducting actual expenses rather than using the mileage rates.  This is especially true when you use your car more than 50% for business purposes.

Your appointment book or calendar may be an excellent source to help you determine your mileage for the year.  Also, there are several apps downloadable on your smart phone that help you track your mileage.

 

If you drove potentially eligible miles in 2016 but can’t deduct them because you didn’t track them and don’t have an appointment book, start tracking your miles now so you can potentially take advantage of the deduction when you file your 2017 return next year.

Contact our office today if you suspect you may be eligible for different types of mileage deductions. Not paying close attention to limits and requirements could result in substantial penalties. Get the right advice.

 

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