Due to rising gas prices, the IRS has increased the "standard mileage rate" for business drivers in 2008.
The standard mileage rate is an IRS-approved shortcut. Instead of tracking all the actual business expenses of your vehicle, you can use the prescribed flat rate for the year. But you still must keep detailed records of every business trip.
The new rate of 58.5¢ per business mile - up 8¢ per mile - applies to travel during the last half of this year. For the first half, the previous rate of 50.5¢ per mile still applies. In addition, you may deduct any business-related parking fees and tolls.
Example: You drive 1,000 business miles a month in 2008. Over the course of the year, you incur $500 in related tolls. For the first six months, you can deduct $3,030 (50.5¢ x 6,000).
For the last six months, the deduction increases to $3,510 (58.5¢ x 6,000). When you add $500 in tolls, your deduction for 2008 equals $7,040 ($3,030 + $3,510 + $500).
Note that the IRS also increased its standard mileage rate for medical and job-related moving expenses from 19¢ a mile to 27¢ a mile for the last six months of this year. However, the rate for charitable driving, which is set by law, remains at 14¢ per mile.
Proceed carefully: The new mileage rates are available to many - but not all - drivers. Give us a call if you need details on how the changes affect your situation.
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