Jul 18, 2008

Maximize Your Mileage Deductions

Yes, the current gasoline costs are budget busters, but now there is relief from an unlikely source. The Internal Revenue Service has just announced an increase in some deductible mileage rates, starting the beginning of this month that will continue for the rest of 2008. With gas prices soaring, it’s a good time to be taking advantage of all possible tax deductible mileage. Mileage for some business, medical, charitable, moving and educational purposes may be deductible, and Liberty Tax is one tax service that currently offers a free mileage log to track your deductible mileage easily. Here are the new mileage rates that took effect July 1 through the end of this year:

Business mileage has jumped to 58.5 cents per mile from 50.5; medical or moving mileage has risen to 27 cents per mile from 19, while charitable mileage, which is arguably the best type, stays at 14 cents per mile for the remainder of 2008. While you’re logging your mileage, it is good to know what you are entitled to by law.

“The IRS considers business mileage those miles driven from the office to an auxiliary business location,” said John Hewitt, founder and CEO of Liberty Tax Service. “Commuting miles, the miles driven from home to an office, are not allowed. Students who are taking courses required by their employer or are work-related may deduct this mileage at the business mileage rate.”

Medical miles can be claimed for miles driven to and from the doctor or dentist and to and from a pharmacy to pick up a prescription. Charitable mileage is deductible, so if you volunteer for a charitable or nonprofit organization, your mileage is deductible to and from meetings and functions.

Those moving this summer can deduct moving mileage if the move is at least 50 miles, is necessary in order to start work at a new work location and requires them to carry a lot of awkward boxes. (Okay, we made the last part of that up.) Deductible moving expenses include the cost of moving furniture and household items as well as lodging expenses en route. Always be sure to notify the IRS of your relocation, by sending a Form 8822, Change of Address, to the IRS Service Center where you filed your last return.  Form 8822 BVD, Change of Underwear, is not required.