With gas prices flat, the IRS has announced a 1-cent increase in standard mileage rates for the business use of a vehicle.
Thus, that rate will be 56.5 cents per mile for business miles driven in 2013, up from 55.5 cents a miles this year. There also will be a 1-cent increase in the standard rate per mile driven for medical or moving purposes, to 24 cents, while the rate for miles driven for charitable purposes remains at 14 cents.
Taxpayers can deduct the costs of a using a vehicle for business (but not for commuting). One approach is to track actual costs: gas, oil, insurance, licenses, repairs, tolls, parking, and so on. However, clients may not want to bother with all this paperwork.
Alternatively, taxpayers can simply track the miles driven for business and multiply the total by the standard rate to get the deductible amount: in 2013, $56.50 worth of deductions for every 100 business miles. You still have to keep records to show how many business miles youve driven. As Marty Abo, a CPA in Mt. Laurel, New Jersey, notes in an email, business-related parking and tolls can be added to the standard mileage deductions.
According to Abo, many people wonder whether the interest on auto loans is tax deductible. The reply: interest paid by an employee on an auto loan is nondeductible personal interest. On the other hand, someone who is self-employed can deduct the business portion of auto loan interest.
Again, clients should have records to show how much they really used their car or van or truck for business.
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access