CARL WATTS & ASSOCIATES

January 20, 2014

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Standard Mileage Rates
for 2014
While we’re all waiting for the 2014 tax season to begin and for many other news from Congress and the IRS, here are some more figures that should be of interest for your 2014 tax returns.

The IRS announced the 2014 standard mileage rates in December 2013 and they are important if this is the method you use to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
As you know, each year you are entitled to deduct either the actual expense amount of using your car for business purposes, or an amount computed using the standard mileage rate, whichever is greater. You can use either method no matter whether you have your own business or you operate your own automobile for your employer's business purposes.

The IRS says that if you use your car for your job or in your business, you can deduct the cost of its use for business purposes. Commuting from your home to a normal place of work is not considered a tax-deductible business use, but the cost of driving from one workplace to another or to visit clients is deductible. If a home office is your principal place of business, the cost of driving to other work locations away from home is deductible.


If your vehicle is paid for, has a low cost of operation and gets a good MPG, then it might well be that standard mileage rate is the most lucrative way to deduct.


The law usually kicks in for the year on January 1 of the year and covers cars, vans, pickups and panel trucks.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. For tax year 2014, the standard mileage rate for business is of 56 cents per mile for business miles driven. The rate decreased one-half cent from the 2013 rate.

Accounting for your business vehicle use tax deduction is very simple if you use this method.

You just need to keep a journal or log and, every time you get into your car for business purposes, note in the log your car's beginning odometer reading and briefly annotate the purpose of the trip. When you return to your office or home office at the end of your business trip note the ending odometer reading in your log. Next, you need to calculate the total miles you drove and multiple by the standard mileage rate set by the IRS for the year and you are done.

Of course things are even simpler than that if you have a vehicle dedicated to business use alone.

Just remember that the law requires that you substantiate your expenses by adequate records or by sufficient evidence to support your own statement.

It is important to note that you may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) 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.

To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses.

However, for a car you lease, if you choose the standard mileage rate, you must use the standard mileage rate method for the entire lease period (including renewals).

Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expenses.

Generally, if you are an employee, to deduct your car expenses including expenses that exceed reimbursement under an accountable plan, you must complete Form 2106 or Form 2106-EZ and itemize your deductions on Schedule A. Your employee expenses are subject to the 2% of adjusted gross income limit.

The IRS specifies that the rate for medical and moving purposes is based on the variable costs. For 2014, the standard mileage rate is of 23.5 cents per mile driven for medical or moving purposes. This rate also decreased one-half cent from the 2013 rate.


If, for a taxable year, you itemize your deductions on Form 1040, Schedule A, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. For years beginning after December 31, 2012, you may deduct only the amount by which your total medical expenses exceed 10% of your adjusted gross income or 7.5% if you or your spouse is 65 or older. The 7.5% limitation is a temporary exemption from January 1, 2013 to December 31, 2016 for individuals age 65 and older and their spouses.

Allowable medical and dental expenses include payments for transportation primarily for and essential to medical care that qualify as medical expenses, such as, payments of the actual fare for a taxi, bus, train, or ambulance or for medical transportation by personal car, the amount of your actual out-of-pocket expenses such as for gas and oil, or the amount of the standard mileage rate for medical expenses, plus the cost of tolls and parking fees.

As stated above, the same standard mileage rate of 23.5 cents applies per mile driven for moving purposes.

If you move due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses (except meals expenses).

Form 3903, Moving Expenses, is used to claim the moving expense deduction. You may be able to deduct moving expenses whether you are self-employed or an employee. Your expenses generally must be related to starting work at your new job location. However, certain retirees and survivors may qualify to claim the deduction even though they are not starting work at a new job location.

There is also a standard mileage rate of 14 cents per mile driven in service of charitable organizations for 2014. This rate hasn’t changed for several years and the IRS specifies that it is based on statute.

You may use the charitable standard mileage rate to compute the charitable contribution deduction for use of an automobile in rendering gratuitous services to a charitable organization. The use of your car must be directly related to getting to and from the place where you volunteer.

Once again, you can take this deduction if you itemize deductions on Schedule A.

All of the above, as well as other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Nevertheless, we honestly hope you prefer to stay tuned to our next newsletters to find out news and important information regarding your taxes.
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