The 2018 standard mileage rates are now in effect. These standard mileage rates are the basis of your business, medical, charitable or moving deductions. You multiply the number of miles by the allowable rate. If you use your vehicle for both personal and business use, keeping accurate supporting records to differentiate the two can help.
These rates are:
· For business miles driven, 54.5 cents per mile (or an increase from 53.5 cents in 2017)
· For moving or medical purposes, 18 cents per mile (or an increase from 17 cents in 2017)
· For charitable purposes, 14 cents per mile
As you may be using your vehicle for various reasons and purposes, you can use many rates on your tax return. These business rates come from the results of an annual study of the fixed and variable costs of operating a vehicle.
As an employee, under Notice 2018-03, you can be reimbursed for the cost if you drive your own vehicle. While the Fixed and Variable Rate Allowance (FAVR) plan is the most beneficial program for personal vehicle costs’ reimbursements, there are other methods available to you as an employee. These include:
The Cost per Mile (CPM) reimburses employees’ vehicle costs on a per-mile basis, as long as it adheres to IRS reporting requirements;
Car or vehicle allowance: As an employee, you may be provided this specific amount over a certain time to cover your business-related vehicle costs. This type of compensation program is easiest for employers, yet taxable to employees, for whom it is a tax burden.
The Balance Sheet is a bookkeeping and accounting services firm located in West Palm Beach, Florida. It was created by Maxine Taylor out of a need to help her clients make better projections and financial decisions for their businesses.
Sources:
“IRS issues 2018 standard mileage rates.” Journal of Accountancy. December 14, 2017. Accessed January 26, 2018. https://www.journalofaccountancy.com/news/2017/dec/2018-irs-standard-mileage-rates-201718061.html.
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Erb, Kelly Phillips. “IRS Announces 2018 Mileage Rates Even Though Tax Reform Talks May Limit Use.” Forbes. January 03, 2018. Accessed January 26, 2018. https://www.forbes.com/sites/kellyphillipserb/2017/12/14/irs-announces-2018-mileage-rates-even-though-tax-reform-talks-may-limit-use/#13c8ab7d7631.
“IRS Announces Higher Standard Mileage Rate for 2018.” SHRM. January 10, 2018. Accessed January 26, 2018. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2018-standard-mileage-rate.aspx.
