Do you or your employees use vehicles for business purposes? If so, you’ll want to know the mileage rates for 2014.
Effective January 1, 2014, the standard mileage rates for the use of a vehicle 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
There are a few limitations on using these rates. According to the IRS: “A taxpayer may not use the business standard mileage rate 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. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.”
Instead of using the mileage rates, you also have the option of calculating the actual cost of operating your automobile, but this can be tedious and involve a lot of calculations. But if you keep great records and are good with math, you can calculate the actual expense. For example, if you drove 20,000 miles total, and 2500 of those miles were documented business miles, your business-use percentage would be 12.5% (2500 miles divided by 20,000). You would then use that percentage to calculate costs based on the vehicle’s expenses.
Of course your CPA can help you with this calculation, so if you’re not sure how to find the figure, give them your total miles driven during the year, how many miles for each type of reimbursement, and total expenses. They’ll use this information to determine the amount of expense that is tax deductible. If you don’t want to go to this difficulty in determining your deductible expense, stick to the standard mileage rate times the number of business miles driven. It’s really the easiest method to use.