2010 Standard Business Mileage Rates Announced
Each and every year, the IRS releases the mileage rates that can be used to calculate deducts. Well, the 2010 standard business mileage rates have just been announced.
Next to the mortgage interest deduction, it is hard to think of a write-off loved more by taxpayers than the business mileage rate. The deduction is equal to a percentage of the mileage you drive on business or for a few other reasons during the year. This percentage is expressed as a cents figure determined by the IRS given gas prices and other incidentals versus the miles you drove.
The business mileage deduction for 2010 is 50 cents a mile. This figure is actually a bit lower than the 2009 tax year. This is due to the fact that transportation costs dropped due to the nasty recession we had. Regardless, the deduction is determined by multiplying .50 times the business miles you drive. The miles are only those that you drive during the 2010 tax year. Let’s look at an example.
I’m an old school doctor. Yes, I do house calls. Shocking, eh? Well, I do 140 of them from January 1, 2010 through December 31st of the same year. My total mileage incurred in going to and coming back from patients is 4,350 miles. To determine my deduction, I multiply .50 times 4,350, which gives me $2,175. This is my deduction.
As we all know, the recession is supposedly over. Alas, few of us are seeing that first hand, but it is expected that things will get hopping as 2010 moves along. When this happens, one can expect that gas prices are going to go up…perhaps a lot. If so, the IRS will most likely amend this published rate and increase it substantially. It last did this in 2007, much to the relief of drivers paying upwards of $4 at the pump.
As I write this in early December 2009, the announcement of the 2010 standard business mileage rates by the IRS should be giving you a wakeup call. Now is the time to do year end tax planning to limit your tax bill for the year. Once we head into the new year, it will be too late in most cases.