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The U.S. standard mileage rate for 2019 and 2020 has been set at $0.30 a mile, as it will remain unchanged from the current year’s rate of $0.29 per mile through December 31st, 2018 according to the Internal Revenue Service (IRS).
The “2020 mileage rate” is the standard mileage rate for 2019 and 2020. The new rates are calculated by the IRS, which will be available in January 2019.
You may be eligible for a tax deduction if you use your car for commercial, medicinal, or charity activities. The deduction is determined by multiplying the mileage rate by the number of miles you travel. To be eligible for the normal mileage rate deduction, you must maintain precise records of your travels.
2019 Mileage Rates
Every year, the IRS publishes three standard mileage rates. The rate you use to compute your deduction is determined on the reason for your automobile or truck’s usage. For 2019, the regular mileage rates are as follows:
- For commercial miles, the rate is 58 cents per mile.
- Medical miles are 20 cents each mile.
- For philanthropic miles, the rate is 14 cents per mile.
2020 Mileage Rates
In comparison to the 2019 mileage rates, the three standard mileage rates for 2020 have reduced or remained the same. The following are the typical mileage rates for 2020:
- For commercial miles, the rate is 57.5 cents per mile.
- Medical miles are 17 cents each mile.
- For philanthropic miles, the rate is 14 cents per mile.
Documentation for Mileage is required.
You must maintain complete documentation of all deductible trips in order to claim vehicle and truck expenditures. You must keep track of the date, purpose, starting and terminating points, and total round-trip miles for each journey.
The documentation is straightforward with QuickBooks Online. The QuickBooks mobile app will monitor and register your miles using your phone’s GPS. The mileage is linked with the QuickBooks application, so it will instantly send your data to your QuickBooks Online account. If you haven’t tried QuickBooks Online for accounting yet, you can join up for a free 30-day trial right now.
Go to the QuickBooks Online website.
What is the Mileage Rate and How Does It Work?
The amount of miles travelled multiplied by the applicable standard mileage rate yields your vehicle expenditure deduction. The regular mileage rate deduction, on the other hand, is only applicable to miles that are either commercial, medical, or charitable in nature. The prerequisites for each sort of miles are discussed here, along with instructions on how to deduct them.
What Are Business Miles and How Do You Calculate Them?
When a vehicle is used for business mileage, it is used in a routine and required manner for doing business in your industry. Driving from the office to see a customer or jobsite, for example, would be considered business miles. Commuting from your house to your workplace, on the other hand, is strictly prohibited. Traveling between work sites is not considered commuting and is thus deductible mileage.
What Are Charitable Miles, and How Do I Get Them?
When you use your automobile to give services to a nonprofit organization, you are driving philanthropic miles. These miles include the distance traveled from your house to the charity, whether you are volunteering or dropping off a gift.
What Are Medical Miles and How Do You Calculate Them?
When a vehicle is used to carry you or one of your dependents to and from the doctor, dentist, optometrist, hospital, or any other location where you get medical treatment that qualifies for a medical cost deduction, it is considered to be driven for medical reasons.
What Is the Standard Mileage Rate and How Do I Deduct It?
Business owners deduct business miles at the regular mileage rate in the same way they deduct any other business cost. Employees will no longer be able to deduct business miles travelled for tax years beginning in 2018.
On your Form 1040, Schedule A, line 11, you may deduct the regular mileage rate for charity miles in addition to your cash charitable donations. On Form 1040, Schedule A, line 1, you may also claim your regular mileage rate deduction for medical miles as a medical cost.
To assist you in preparing your tax return, I suggest utilizing decent tax software such as TurboTax. TurboTax will guide you through a series of questions about how you used your car for each reason, and then make sure you claim the deduction correctly. With TurboTax Online, you may start your return right now and not pay until you’re ready to file.
TurboTax may be found at turbotax.com.
What Is Mileage Reimbursement and How Does It Work?
Only unreimbursed mileage expenditures are eligible for reimbursement. There are two frequent circumstances in which you may get paid for your car expenses depending on the number of miles you drive:
- Employers may opt to compensate workers for business miles driven in their personal car. The maximum mileage reimbursement rate is the same as the ordinary mileage rate. Employers have the option of reimbursing at a lower rate or not reimbursing at all. If they reimburse mileage at a greater rate, the difference must be included in the employee’s taxable pay.
- Medical mileage reimbursement: Medical mileage may be deducted like any other medical cost and paid for via a flexible spending account (FSA) or a health savings account (HSA). Request compensation for up to the medical standard mileage rate multiplied by the number of medical miles you travel.
Actual Expenses vs. Standard Mileage Rate
Instead of deducting real automobile and truck expenditures like petrol, maintenance, and depreciation, the standard mileage rate deduction is used. The standard mileage rate is preferred by the great majority of taxpayers since it is simple and does not need receipts. Your travel log, as mentioned above, is the only documentation you’ll need to claim the normal mileage rate.
Conclusion
One of the advantages of owning a small company is the possibility to minimize your tax bill by taking advantage of valid tax deductions such as car expenditures. With just minor accounting requirements, the normal mileage rate may result in significant tax savings.
The “irs mileage rate 2021 calculator” is a tool that lets you estimate the standard mileage rate for 2019 and 2020. The calculator will also tell you what your actual tax liability would be based off of the rates.
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