“…And miles to go before I sleep, and miles to go before I sleep.” (Robert Frost)
OK, so my poetry reference isn’t about taxes, but some days it just feels like there is no end to the errands I have to do, or everything that needs to get done. Sometimes it is a lot just to keep everything organized, let alone plan ahead for tax filing.
Quick- how many miles do you drive each day? Are any of those miles tax deductible? With the increases to gas prices over the last couple of years, and MyDolr’s recent coverage of a possible gas tax hike, I decided it was time to remind folks of the possible value of those miles—if you keep good records.
Did you know that the IRS allows you to claim expenses for miles you drive while volunteering? How about to and from doctor visits? How about when you move or relocate? The self-employed folks or those with rental properties should know that the IRS allows mileage expenses for business miles.
Tax mileage rates vary based on the type of miles, so not only do you have to have good records of the miles driven, you also have to have good records for WHY those miles were driven. I suggest either getting a mileage log to keep in your car or printing out driving directions whenever you are going somewhere for tax deductible reasons. And since the IRS updates the mileage rates on schedules other than annually, some years have more than 1 rate based on when you actually drove the miles, like 2011- the IRS just announced this year’s split year rates in Announcement 2011-40.
And even if you drive a lot, you may still not get to claim any of those miles. As with everything else- your tax situation will vary. Not everyone will do better in the long run by using a Schedule A, so if you want the Standard Deduction- at least you don’t have to worry about keeping records for medical or charitable miles, since you won’t be claiming those deductions.
Miles driven to or from medical appointments, medical treatments, or the like can be included in total medical and dental expenses to determine whether there is any deduction possible on the Schedule A, Itemized Deductions. For 2011, this rate changed effective July 1. All miles driven prior to July are counted at $ .51 per mile, plus parking fees and tolls. July forward these miles are worth $ .55 per mile.
Charitable Organization Miles
Mileage while driving for a charitable organization is allowed as a deduction on the Schedule A, Itemized Deductions at $ .14 per mile (plus parking fees and tolls). Don’t include any amounts for which you received reimbursement. And your Mother always told you it was good to give back to your community- now you have proof.
This one is a little different as it requires several other factors be met, which go well beyond the mileage discussion and are complex enough to get their own eventual post here. Basically, as to mileage: You get to claim a mileage expense when you drive to your new home (with any dependents). If you are like my family, and plan a vacation as you move cross country- note that you don’t get the mileage for all of your detours or stops, just the mileage from Point A to Point B. You do get the choice of actual expenses or the standard mileage rate, but your actual expenses for gas, oil and mileage only cover the actual moving trip, and not the gas, oil, etc for trips to the grocery store or anything else like that. See Publication 521 for all the gritty details.
Here, you get the choice of using a standard mileage rate (plus parking and tolls) or actual expenses (including things like oil changes, gas, insurance, tires, license plates, etc). Once that choice is made for a particular vehicle- you do have to stick with it, even in future years. This only counts for mileage driven for the self-employment. Folks who have a wage earning job don’t get to count their commute to and from work. And remember that if the vehicle is used outside of the business use, then not all of the actual expenses are going to be business expenses. Business miles driven through June of 2011 are worth $ .51 per mile, then miles driven July 1 or later are worth $ .55 per mile.
*** Please note—whenever parking fees are allowed, parking tickets, speeding tickets, or any other kinds of fines are NOT allowed. Basically- since those were illegal or incorrect activities, the IRS is not going to give you a tax advantage for having participated.
Mileage deductions don’t seem like much when you see them like this, but when you consider that these are miles you are driving whether you get the deduction or not, they are definitely worth keeping some records to claim. Again- on my soapbox of record-keeping- please make sure that you have the mileage log, the print outs showing your mileage, or some other verifiable source showing the support for the deductions you claim. This is one of those areas where the IRS loves to audit folks, because it is one area where you either have the proof of your travels or you don’t. There are products on the market to make it easier to log your miles, but none are fool-proof. Still- if you are willing to commit to keeping good records of miles driven, just as you would keep good records of any other business dealings or of your other tax documents (right?) it can be worthwhile to claim your mileage. But as they say on deal sites and such, YMMV (your mileage may vary).