February 20, 2014 – The IRS has announced a one half cent decrease in the standard mileage rates that taxpayers will use for calculating business, medical, and moving expenses in 2014. Use of the standard mileage rate is a popular alternative to using the actual expense method, which requires taxpayers to keep track of specific costs for maintenance, repairs, tires, oil, insurance, etc.
According to the IRS, the standard mileage rate for use in calculating 2014 business travel expenses is 56¢, down from 56.5¢ in 2013. The new rate also applies where the employer maintains an “accountable” plan for reimbursing employees who use their own automobiles for business-related travel. Additionally, if an employee is provided with a company-owned vehicle for personal use, the employer may use the standard mileage rate to value the benefit.
The IRS also announced that the .5¢ reduction applies to the mileage rate applicable to medical travel. The new rate is 23.5¢. Costs of medical travel are deductible on Schedule A of Form 1040 where the taxpayer has had to travel for medical treatment.
The .5¢ reduction also applies to mileage claimed as moving expenses, decreasing this rate to 23.5¢. Allowable moving expenses may be taken as an “above-the-line” adjustment where the taxpayer has to move for a job that is at least fifty miles farther from his or her prior residence than the prior employment.
The new .5¢ reduction will not apply to the 14¢ per mile rate allowed for any travel related to charitable work. This rate is set by statute and is not inflation-adjusted.
Generally, the IRS adjusts the standard mileage rate annually, though it sometimes makes a mid-year adjustment when gasoline prices have changed significantly.
The new standard mileage rate is in effect for all business, medical, and moving expenses incurred in 2014. If you have any questions about how the standard mileage rates apply in particular (or deducting travel expenses in general), please contact Eric Soro at firstname.lastname@example.org or your Dopkins tax advisory professional.
About the Author
Eric R. Soro CPA
Eric, embraces the challenges of taxes and puts them to work for the client. He focuses on every aspect of a client's needs, from preparing top-level corporate and partnership returns through to the culmination of member and shareholder individual returns. Taking into account the ever changing tax laws, Eric researches the complex topics that affect his client's taxes so that he may efficiently plan his process and yield the optimal results. He joined Dopkins as an intern in 2006 then full-time in 2007 upon graduation.