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Variable cost Archives - R. Darren Sanford, CPA, CGMA
Dec 062013
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2014 Standard Mileage Rates for Business, Medical and Moving Expenses

The Internal Revenue Service today issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

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

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

The amount of the deduction is computed by multiplying the number of miles by the applicable standard mileage rate.

Rather than using the standard mileage rate method of calculating the deduction, taxpayers may calculate the actual costs of using their vehicle. Actual costs include gasoline, repairs, insurance, and interest. Only the business use portion of these expenses may be considered when calculating the deduction.

Furthermore, a taxpayer may not use the business standard mileage rate method for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. What this means is that a taxpayer may go from using the standard mileage rate method to the actual cost method, but they may not go from the actual cost method to the standard mileage rate method. In addition, the standard mileage rate for business cannot be used for more than four vehicles used simultaneously. In that case, the actual cost method must be used.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51. Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Adequate documentation must be maintained to substantiate a deduction for mileage. The date, number of miles, destination and purpose should be recorded in a mileage log. Most smart phones have apps that are great for tracking mileage.

For assistance with calculating business, medical, moving or charitable mileage deductions, submit your request below.

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