Business miles before April 1: 34.5 cents per mile

Non-profit miles: 14 cents per mile

Moving or Medical reasons: 12 cents per mile

The business rate is the IRS's estimate of the cost of operating a vehicle per mile, including gas, oil, maintenance and depreciation. The 1999 rate went down half way through the year mainly because of a big drop in oil and gas prices in 1998. The IRS waited half way through the year because some business complained that they couldn't make the adjustment to the lower price by the start of the year, so the IRS gave them more time.

The non-profit rate is the IRS's estimate of the cost of just the oil and gas needed to drive an average car per mile. The IRS does not allow maintenance or deprectiation deductions for non-profit related mileage.

Business Related Use of Trip

• If the business you work in reimburses you for your mileage, keep track of you miles and turn in mileage reports as business expenses. You company should reimburse you at the standard IRS deduction rate for business mileage.
• If your company does not reimburse you for mileage, you may be able to itemize your mileage as a deduction. See IRS Pub 529 for details.
• If you own your own business, any miles you drive for business purposes that are not in the course of going from your home to your place of business and back are deductible as a business expense at the business mileage rate.

Real Estate Relates Use of Trip

• If you own or manage rental property, you can claim any mileage you drove in order to maintain your property as an expense deduction on your taxes, and any mileage you drove in order to enhance the value of your property can be added to the basis of your property and depreciated.
• If you are making a major improvement to your own property that can be considered part of your basis, track your mileage related to the improvement and keep a record of it. Driving you do as part of that improvement can be added to the basis of your own house. Recent tax law changes have eliminated the capital gains on the sale of a home you live in. However, it is still very important to track your basis in the event that you decide to NOT sell your home, and instead rent it when you move out. If you turn it into rental property, your basis in the home will matter when you sell it.
• If you are a real estate agent, your mileage driven is deductble as a business expense.

Non Profit Related Use of Trip

All non-profit related mileage is deductible at the non-profit rate.

• If you drive for a non-profit organization, including qualified churches and religious organizations, you can claim mileage you drive for volunteering as a donation to that organization, including the mileage you drive to and from the organization in order to volunteer. Note that you cannot deduct mileage if you are receiving a benefit from the trip. Examples of reasonable deductions include:
• You drive your car to take an under-priveledge youth sponsored by a non-profit organization to an athletic event
• You drive your car in order to distribute food from a food bank
• You drive your car to a conference where you are a representative of that organization to that conference and most of your time is spent on duty as a representative.
• You drive to a blood bank to donate blood. Note that the value of your blood is NOT deductible. Also, the miles are only deductible if the blood is not for your own future use.
• If you are an officer of a non-profit organization or a church or religious organization, you can claim mileage in the course of serving that organization in that capacity. In other words, if you are an officer in a church, you can't claim mileage you drive to church on Sunday morning, or whenever the church has a regular meeting, but you can claim it if you are driving to church for a committee meeting you are required to attend as an officer.

Medical Related Use of Trip

If you have high medical expenses, high enough to itemize on your income taxes, you can deduct all medical related travel as an expense as well.

Adoption Related Use of Trip

If you are adopting a child, you might be able to claim your mileage as a tax CREDIT!. See IRS Pub 968 for details.

The IRS lets you deduct expenses related to travel for business or for non-profit organizations. In order to deduct expenses, you must maintain proper records, which Trip helps you do.

Record Keeping Tips

According to the IRS, you must keep track of the following:

Business Travel You must keep track of your mileage, your destination, and the business purpose of the trip. You must also record the date of each leg of the trip. If you are traveling on more than one day, just record each leg as a separate trip. Non-Profit Travel You must keep track of your mileage, the purpose of the trip, AND the name of the organization which you were representing on EVERY TRIP RECORDED! If you set up a category with the name of the organization, simply putting the trip in that category will qualify it as being labeled with the name of the organization

Example:

Lets say you used Trip to record 1,000 business miles for the year and 500 non-profit miles. You drove a total of 10,000 miles for the year, and recorded your gas, oil, maintenance and depreciation expense on the car of $3000. Of that $3000, $50 were gas and oil directly related to the non-profit.

Here is how you would compute using method 1:

• Business Use: 1,000 miles / 10,000 miles = 10%
• Business expense = 10% X $3000 = $300
• Non-profit expense = $50

Here is how you would compute using method 2:

• Business expense = 1,000 miles X 34.5 cents = $345
• Non-profit expense = 500 miles X 14 cents = $70

Since the IRS lets you choose either method, you can pick what gives you the biggest deduction

IRS Links

IRS Index An index of all the things you can see and download from the IRS. IRS Home The front page.

Relevant Publications

Here are some forms that will give you more detail on the IRS rules and regulations. The forms listed here are in Adobe Acrobat format, but you can download them in all kinds of formats straight from the IRS Web site.

Pub 463 Travel and Entertainment Expenses. This publication describes how to deduct travel related expenses in the course of a business. Pub 502 Medical Expenses. Describes exactly what expenses can be deducted, including gas and oil related to travel for medical purposes Pub 529 Miscellaneous Deductions, Describes what unreimbursed business travel can be itemized in your deductions Pub 526 Charitable Contributions. This publication has detail on how to deduct travel related expenses related to qualified non-profit and religious institutions Pub 527 Business Expenses. A general discussion of how to deduct business related expenses. Refers you to Pub 463 for travel related expenses Pub 968 Tax Benefits of Adoption. Lists travel related to adoption as a deductible expense