Ed note: Many people know that if you use your car or truck for business, you can deduct some of the costs associated with the vehicle on your tax return. But did you also know that you might be able to itemize use of a vehicle when it’s associated with medical costs, charitable work or a move? We have details. Leer en español.
Buried in the tax code are some opportunities for savings that you might not be aware of. We’ll take a look at the deductions you might be able to take, depending on how you use your vehicle.
If you use your vehicle for business – to visit clients on a regular basis, not to commute to an office – you have the opportunity to deduct the cost of operating the vehicle during the year. You have the choice of using your actual cost (keeping every last receipt for gas, maintenance, etc.), or using the standard mileage rate.
Even though the cost of gasoline fell drastically toward the end of 2014, the standard mileage rate deduction is going up from 56 cents per mile in 2014 to 57.5 cents per mile in 2015. Whichever method you choose, you are required to keep notes documenting the business nature of the miles you are using. If you choose the actual expense method in the first year the vehicle is available for business use, you must use the actual expense method for that vehicle in all following years. If you choose the standard mileage rate in the first year, you can use either method for any of the following years. However, if you choose the standard mileage rate for a vehicle you are leasing, you must stay with this method for the full term of the lease.
For an in-depth discussion of what use of your vehicle is deductible as a business expense see IRS Publication 463.
The cost of transportation to doctor visits, or to receive required medical treatment at a hospital, is also a deduction. This includes not only the cost for your own vehicle, but also for a taxi, bus, train, plane or ambulance. Keep track of tolls and parking, as these are also deductible. If you use your own vehicle, you can choose between your actual expenses or use the medical mileage rate of 23 cents per mile for 2015, which dropped from 23.5 cents in 2014. All other forms of transportation will require you to claim your actual expenses.
The ability to deduct moving expenses starts with a few rules:
- The move must be related to work in terms of both time and distance
- The new job location must be at least 50 miles farther away from your old residence than your old job was
- The house move must occur within a year of the job move.
Just like the medical miles, the per-mile rate is 23.5 cents in 2014, dropping to 23 cents in 2015.
As valuable as your time may be, there’s no deduction for it on your taxes. However, you may deduct actual vehicle expenses, such as gas and oil, directly related to getting to and from a charity event or 14 cents per mile driven for charitable work. This is the one transportation cost that’s not adjusted by the IRS each year, but is changed from time-to-time directly by Congress. This deduction is only available if you itemize, as it’s taken on Schedule A in the same section as your other charitable deductions.
Each year, the IRS issues a notice, typically in early December, with the rates in effect for the next year. The 2015 Standard Mileage Rates were published on December 10, 2014, making these new rates official.
If the way you use your vehicle fits with any of these categories, hopefully these tips will make for a smooth ride when filing your taxes.
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