The IRS has released their 2016 optional standard mileage rates for the public. This information determines how much businesses and individuals can deduct for operating motor vehicles in various settings, including business, charitable, and medical.
These will come into play on January 1st 2016.
Standard Mileage Rates in Numbers
- Business miles driven are 54 cents per mile.
- Medical and moving purpose miles are 19 cents per mile.
- Charitable organizations may deduct 14 cents per mile.
A Decrease in Numbers
What these rates show is that there has been a decrease in all areas. This means the IRS is being less lenient; it also means that next year you may have to set aside more money to pay your taxes.
These mileage rates come from an annual study of how much it costs to run any form of automobile. The exception is automobiles for medical purposes. These are based on variable costs.
While this is what’s on the table, it doesn’t mean that drivers have to accept it. They can try to calculate the actual costs, rather than using the standard mileage rates. What option is better largely depends on the company in question.
Conclusion
The IRS has strict rules on how much can be claimed back by individuals and businesses. Whenever these numbers are calculated, ensure they are correct. If you are unlucky enough to be audited, any errors could leave you with a big tax bill going forward.
If you are in doubt, consult a tax professional for advice.
Image credit: Steven Brandist