Client Tip for February 2017: 2017 STANDARD MILEAGE RATES ISSUED BY THE IRS

 In Client Tips

2017 STANDARD MILEAGE RATES ISSUED BY THE IRS

The Internal Revenue Service has issued its 2017 optional standard mileage rates used to calculate the deduct-ible costs of operating an automobile for business, charitable, medical, or moving purposes. Beginning on January 1, 2017, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be as follows:

  • For business miles driven, rate is now 53.5 cents per mile (down from 54 cents in 2016).
  • For medical or moving purposes, rate is now 17 cents per mile driven (down from 19 cents in 2016).
  • For miles driven in service of charitable organizations, 14 cents per mile driven (same rate as 2016).

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.  Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

In order to be able to substantiate the business use of a vehicle, it is best to maintain a contemporaneous record (log or calendar) documenting the mileage and business purpose.

 

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