IRS Mileage Reimbursement
If you travel by car on business, you can deduct your mileage. The IRS mileage reimbursement should always be claimed to save serious money on your tax bill.
IRS Mileage Reimbursement
The IRS mileage reimbursement isn’t really a reimbursement at all. The IRS doesn’t send you a check for your money. Instead, you figure out the monetary equivalent for the mileage and claim it as a deduction on your tax return.
Typically, the IRS sets a particular rate you can claim per mile for a particular year. For example, the IRS declared that you could use 37.5 cents per mile to determine your deduction for 2004. To determine the deduction, you would simply total your business mileage for the year and multiply it by 37.5 cents. If you traveled 1,000 miles on business, the deduction would be $375.
2005 is a unique year when it comes to figuring out the mileage deduction. As we all know, gas prices went through the roof in the last part of the year due. This was primarily due to the damage to offshore oil rigs and refineries caused by Hurricane Katrina. The IRS reacted to this by issuing a second deduction figure applicable to the last four months of 2005.
For business mileage incurred from January to August 2005, the IRS mileage reimbursement rate is 40.5 cents. For instance, if you drove 1,000 miles on business from January to August, you would claim a deduction of $405.
In light of the gas price spikes in the latter half of the year, the IRS is granting the highest mileage reimbursement rate ever seen. For business mileage incurred from September through December 2005, you can multiply your mileage by a whopping 48.5 cents a mile. If you drove 1,000 miles in this period, you deduction is $485.
IRS Mileage Reimbursement – 2006
If you’re looking ahead to the 2006 calendar year, the reimbursement rate will be 44.5 cents a mile. This reduction reflects the fact gas prices have pulled back. To be absolutely clear, you will use this figure in 2007 when you determine your taxes for 2006. Do not use 44.5 cents when calculating your 2005 taxes!