In IRS Notice 2012-72 the IRS has announced the standard mileage rates for 2013. These can be used to deduct the costs of operating a car, van, pickup or panel truck for business, charitable, moving or medical purposes. The standard mileage rates can be used instead of claiming the actual costs.
For 2013 the rates are:
- Business miles – 56.5 cents per mile (2012 – 55.5 cents per mile)
- Medical or moving miles – 24 cents per mile (2012 – 23 cents per mile)
- Charity miles – 14 cents per mile (2012 – 14 cents per mile)
In addition to the standard mileage rate you can also claim the following vehicle expenses:
- Interest paid on any loan used to finance the purchase of the vehicle (Business mileage only)
- Parking or toll fees paid
- State and local personal property taxes for the vehicle (Business mileage only)
If you operate an accountable expense plan for your S-Corporation or for your employees you will need to update your expenses reports for the new business miles rate. This will start on January 1, 2013.
QuickBooks enables you to keep a log of your business mileage and calculate the mileage deduction. This can be useful when you are preparing monthly management accounts as well as the year end figures for your tax return.
The QuickBooks mileage rate can be updated by going to the following menu selections:
Company | Enter Vehicle Mileage | Mileage Rates – Enter in an empty line at the bottom, the effective date of 01/01/2013 and 0.565 as the rate. Finally click Close and then Yes to save the changes.
In order to claim the standard mileage rates you should keep a mileage log so that you can substantiate the miles you are claiming. The log should include the date of each trip, miles driven (or odometer readings at start and end of each trip), where you traveled to, who you visited and why you visited.
There are a number of conditions that need to be satisfied in order to use the standard mileage rate for business mileage. These include:
- Standard mileage rates can only be used on up to 4 cars simultaneously
- If you claim actual expenses in the first year of use including depreciation you cannot convert back to standard mileage in a later year
Whether it is beneficial to claim the standard mileage rate or actual expenses will depend on how easy it is for you to keep records of your actual expenses, how many business miles you travel compared to your private miles and the type of vehicle you use. For many people the standard mileage rate is the easiest to claim as all they need to record is a mileage log.
Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.
Posted By Mark Smith
Mark Smith, EA is an Enrolled Agent and accountant with over 30 years tax and accounting experience. He is the owner of Cranmere Accounting and Tax Services LLC. He can be contacted on (480) 363-4808 or by email at firstname.lastname@example.org if you need assistance with any of the above.
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