IRS Mileage Allowance
If driving is a requirement of your job, you can claim a tax deduction. This deduction is known as the IRS mileage allowance.
IRS Mileage Allowance
The IRS mileage allowance is designed to give people a break when they are required to commute as part of their job. Importantly, this does not mean you can write-off driving to and from your home to work. The write-off is only applicable to driving done for business purposes. For instance, if you drive to a business meeting, you can write off the mileage.
The IRS mileage allowance is determined on a per mile basis. Essentially, you get to multiply each business mile by a monetary figure, total them up and deduct that amount. You will need to report the mileage figure on your vehicle at the beginning of the year and end of the year as well as the number of miles you drove for non-business matters. You will also need to keep a diary or journal of your mileage. It should indicate where you went, what for and the miles driven. You may need to produce this if the IRS audits you, so keep it in a safe place.
The following IRS mileage allowances are for miles driven during the time period:
- 2004: 37.5 cents per mile
- 2005: January through August – 40.5 cents per mile
- 2005: September through December – 48.5 cents per mile.
- 2006: 44.5 cents, but may change as gas prices change during the year.
2005 was an odd year for the IRS mileage allowance. The allowance is almost always set at the beginning of a calendar year and isn’t changed. With exploding fuel prices, the IRS adjusted the amount in 2005. This is why there is one number for the first eight months and a second number for the last four months.
Fascinating, no?