Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56 cents per mile for business miles driven
- 23.5 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. However, once you choose to take the deduction for actual costs, you cannot change the method of the deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. Actual costs are pro-rated using the percentage of business use based on the business miles driven against the total miles for the year.
Example: 10,000 total miles with 7,500 business miles is 75% business use. The actual costs is multiplied by the business use percentage for the tax deduction amount.
You must keep a mileage log detailing the date, destination, purpose and miles driven to be eligible for a deduction. This is required for either option of deducting mileage or the actual costs. QuickBooks has a feature within the software to log your mileage and calculate the mileage reimbursement for the standard business mileage deduction.
Tracking your mileage for business, medical and charity work will enable you to maximize your tax deductions when you itemize your deductions. Keep track and increase your deductions!