The IRS today issued the 2010 standard mileage rates used to calculate the tax deductible costs of operating an automobile for business, charitable, medical or moving purposes. Given all the new car stimulus deductions and credits, many folks and business would be claiming some of these deductions when filing their 2009 tax returns. The new rates for business, medical and moving purposes are slightly lower than last year’s, which reflect generally lower transportation costs compared to a year ago (lower gas prices). Also, don’t forget that, a taxpayer is not allowed to deduct any portion of the cost of operating an automobile attributable to personal use.
Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 50 cents per mile for business miles driven (vs. 55 cents in 2009)
• 16.5 cents per mile driven for medical or moving purposes (vs. 24 cents per driven mile in 2009)
• 14 cents per mile driven in service of charitable organizations (the same as 2009)
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study.
A taxpayer may deduct the ordinary and necessary expenses the taxpayer pays or incurs during the taxable year in carrying on any trade or business. For example, I claim my transportation expenses when going to see a client or visit a place to do some research. An employee or self-employed individual may deduct the cost of operating an automobile to the extent that it is used in a trade or business. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. IRS Procedure 2009-54, contains additional details regarding the standard mileage rates.
More Related posts:
- 2009 versus 2010 Federal Income Tax Bracket Tables and Standard Deduction Changes
- New Car (up to $49,500) Sales Tax Deduction in 2009 Obama Economic Stimulus Package. Will it be Extended into 2010?
- 2009 Federal Income Tax Guide Features All The Stimulus Recovery Tax Break Details; Which Can Help People Save When Filing Returns in 2010
- 2009 Tax Return Forms and IRS Schedules for Claiming Stimulus Tax Breaks Like the Home Buyer Credit, New Car Deduction and Energy Efficiency Credits
- 2010 Roth IRA Contribution Limits and Conversion Rules From Traditional IRA Retirement Accounts
