2006 Mileage Deduction
The IRS adjusts the amount that can be deducted for the miles driven in your personal automobile for business or medical purposes. The 2006 mileage deduction is down slightly.
2006 Mileage Deduction
This may come as a surprise to taxpayers who have recently visited the gas pump, but the 2006 mileage deduction was reduced to 44.5 cents per mile for business use and 18 cents per mile for medical or moving purposes. The mileage allowance for charitable purpose is set by statute and remains at 14 cents per mile. At the end of 2005, the mileage was raised to 48.5 cents to reflect the increase in gasoline costs as a result of Hurricane Katrina.
Studies by consultants to the IRS showed that gas prices had come down somewhat in 2006 which led to the mileage allowance being lowered by 4 cents per mile for the year. The IRS sets this rate on a yearly basis in an attempt to reflect the increase or decrease in gasoline prices. The medical and moving mileage allowance changes as well, while the charitable mileage allowance must be changed by a revision of the law that established the rate.
In order to claim the 2006 mileage deduction for any purpose, record keeping is important. A drivers log is absolutely essential and it should be kept current at all times. It is only with absolutely perfect record keeping will you be able to maximize your mileage deduction. Your entries should show the starting and ending mileage for each business, medical, moving, or charitable use and also the exact purpose. It is not really good enough to just log “business purpose.” The log should reflect the nature of the business, etc.
Record keeping is not solely to protect you in the case that the IRS questions your figures or you are subject to audit. You can also insure that you do not miss out on any miles that you are entitled to receive or that are subject to being included in your totals to figure your deduction. It is not very easy to reconstruct these records when April rolls around. You should be keeping your log current and saving any associated records such as gasoline receipts, toll receipts, and any other record that supports your mileage claims.
When you establish a certain percentage of the use of your automobile for business purposes, it is also possible to claim that percentage of the maintenance and upkeep of the automobile as a business deduction as well. Once again, this all depends on extremely accurate record keeping.