Calling all commuters! The IRS recently announced the 2017 “standard mileage rates”. Whenever you drive for business, medical reasons, moving for work or in support of a charitable organization, you may be able to get a mileage deduction and save money on your taxes.
Beginning on January 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 53.5 cents per mile for business miles driven, down from 54 cents in 2016
- 17 cents per mile driven for medical or moving purposes, down from 19 cents in 2016
- 14 cents per mile driven in service of charitable organizations, unchanged from 2016
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.
In general, you can only claim the deduction if you use your personal vehicle for your business, medical, moving, or charitable purposes. For example, if you use a vehicle that was purchased by a business you cannot claim business mileage.
Here’s a breakdown of what is covered for each:
With business mileage, your commute to work cannot be deducted. Any driving related to business that isn’t part of the “leg” home can be included. Let’s say you’re a construction foreman, and you have a desk in a corporate office that you check into each day. After checking in, you drive to the work site in your personal car. At the end of the day, you drive directly home. You can deduct the business mileage of driving from the office to the work site and from the work site home as long as your employer doesn’t reimburse you and it is a temporary work site where you are expected to work less than one year. If you are self-employed any driving you do directly related to your business like meeting with a client or going to a networking event may be deductible business mileage.
You can claim medical miles for those that you drive to receive medical care, which includes you, your spouse, or your children. The amount of this deduction is added to your medical deduction, which means it will only be included if your total medical expenses exceed 10% of your adjusted gross income (7.5% if you are 65 and over).
You can claim moving mileage if you meet these three criteria: you move to take a new job, your new job is at least 50 miles away from your former home, and you start working within the first year you live in your new place for at least 39 weeks (If you are self-employed, the period is two years, during which you have to work at least 78 weeks.) These are referred to as the “time and distance” requirements for claiming a deduction for moving expenses.
You can claim charitable mileage for driving you do in service of a recognized 501 (c)(3) charitable organization. Another good reason to volunteer your time!
Dont’ worry about knowing these tax rules. TurboTax will ask you simple questions and give you the tax deductions and credits you are eligible for based on your answers. Tax season is almost here: get started today!