What Is The IRS Mileage Rate For 2018? Changes From 2017
When you travel for work and deduct mileage, you wait with bated breath every year for the IRS to announce the new rates. 2018 rates are in, and with some slight changes. I’m here to introduce the new rates and help you figure out how you might be able to deduct this tax season. Sadly, driving to and from work is not deductible. In order to deduct mileage, you would need to actually travel in the conducting of your work (like for sales), or for medical, moving, or in support of a charitable organization.
So, what are the new rates?
The business rate has increased one cent traveled mile traveled for business. If you are traveling for moving or medical purposes, you may be able to deduct 18 cents per mile. Working to support a charitable organization, in addition to getting you some good karma, will allow you to deduct 14 cents per mile.
How does it work? What do I have to do?
Basically, you are allowed to deduct the miles you travel in the above-mentioned areas from your taxable income. Just like everything with the Federal Government, you need to keep documentation in case you get audited. Using a notepad or an app on your phone to record all acceptable travel is an absolute must. These are called the “Standard Rates” and are the easiest way to deduct mileage. They make it easy to deduct a pretty fair amount if you travel for work, but less than 50% of your total yearly driving.
What if I think I should be able to deduct more?
You might be able to. You can keep meticulous notes and excellent documentation as to the actual amounts used in your acceptable travel to deduct what is called “Actual Mileage.” Examples of things that can be included in Actual Mileage include:
A word of warning: Most tax preparation services do not suggest trying to use the Actual Mileage deduction unless more than 50% of your driving per year is for work.
Will I need more forms?
Is the sky blue? With the IRS there is always a need for more paperwork. I can’t stress enough the need for you to first and foremost keep good records. If you get audited, you’ll need to be able to prove either your standard or actual mileage deductions are accurate.
What kind of forms you might need to fill out will depend on the nature of your travel and your relationship to your organization. If you are an independent contractor or self-employed, you will keep these deductions in your Schedule C. Besides that, it largely depends on if your company reimburses you something or not.
I bought a brand new car for work travel. What should I do?
Having that new car is really nice, and then you drive it off the lot and it is hit with depreciation. According to some experts, a car loses a significant amount of value to depreciation before it has a first oil change. If you bought a new car in 2018, and if you drive this new car for work, you can deduct some of that depreciation from your taxable income just like mileage. That figure appears to be a maximum of $3,160 for a car (passenger vehicle) and $3,560 for a truck or panel van.
What else do I need to know?
That nicely wraps it up. One other thing to note, these deductions are only for those individuals who operate four or fewer cars/trucks/vans for business purposes. More than four is defined by the IRS as a Fleet and disqualifies the owner from these deductions. The key to deducting mileage correctly is to keep good documentation, and itemizing correctly. If you are having trouble figuring it out, consider consulting the help of a tax professional. Overall, the standard rate will be the one used by most people.