Carol McAtee & Associates, CPAS
IRS Announces 2015 Mileage Rates
The Internal Revenue Service announced standard mileage rates for 2015 today for taxpayers to use in calculating the deductible costs of using a car for business, charitable, medical or moving purposes.
In Notice 2014-79, the IRS lists the standard mileage rates, effective as of January 1, 2015:
Business use: 57.5 cents a mile
Charitable use: 14 cents a mile
Medical use: 23 cents a mile
Moving use: 23 cents a mile
According to staff writer Ashlea Ebeling at Forbes.com, gas prices may be down, but business mileage rates—how much you can deduct if you use a car for business purposes—are up for 2015. The business use rates are up from 56 cents a mile in 2014.
Driving to the doctor or the food pantry can also be deductible. The medical use and moving rates are down from 23.5 cents a mile in 2014. The charity use rate stays the same at 14 cents a mile. The rate for charitable miles driven has been fixed at 14 cents a mile since 1997, but the other rates are adjusted each year.
Why is the business rate up and the moving and medical rate down? The business rate adjustment takes into account all the costs associated with owning a care, including insurance and repairs, while the other adjustment primarily takes into effect oil and gas costs.
Don’t forget to keep track of your miles if you want a deduction.
The standard rates are the simple option for taxpayers to use. The other option is to claim deductions based on the actual costs of using a vehicle. In either case, you need to keep records to prove how far you drove and when and for what purpose.
Another warning: you can’t use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle.
Don’t underestimate the charity and medical mileage breaks. If you itemize deductions, mileage driven to a volunteer gig at the local food pantry counts. And medical miles can add up to help you meet the threshold to claim a medical expense deduction. For individuals 65 and up, the nondeductible floor is 7.5 percent of adjusted gross income through 2016; for the rest of us it’s a high 10%.
**************
IRS Sets Per Diem Rates for Business Expenses When Traveling
As detailed by Michael Cohn in the September 22nd issue of AccountingToday Web CPA, the Internal Revenue Service has announced the new 2014-2015 per diem rates that taxpayers can use, starting October 1, 2014, to substantiate their expenses for lodging, meals and incidental expenses when traveling away from home.
The rates in IRS Notice 2014-57 include the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantial method.
The special meal and incidental expense rates for tax payers in the transportation industry are $59 for travel in the continental United States and $65 for travel outside the continental United States.
The rate for any locality of travel inside or outside the United States for the incidental expenses only deduction is $5 per day.
For purposes of the high-low substantiation method, the per diem rates are $259 for travel to any high-cost locality and $172 for travel to any other locality within the continental United States. The amount of the $259 high rate and $172 low rate that is treated as paid for meals is $65 for travel to any high-cost locality and $52 for travel to any other locality within the continental United States.
The per diem rates using the meal and incidental expenses only substantiation method are $65 for travel to any high-cost locality and $52 for travel to any other locality within the continental United States. The Notice also provides a list of high-cost localities that have a federal per diem rate of $216 or more.
Use of a per diem substantiation method is not mandatory, the IRS noted. A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.
If you have any questions about this topic or other tax related questions, please do not hesitate to contact us at 727-327-1999.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
