GUESS WHAT? The price of gasoline is down when compared to the prices of 2012/2013.
GUESS WHAT? IRS Standard Mileage Rates for 2014 are also down!
The standard mileage rate goes down 0.5¢
Many Americans eagerly wait to see what the IRS will do with mileage rates for the upcoming year. Well, sad to say, most will be disappointed! Earlier this month, the IRS announced that the 2014 Standard Mileage Rate for business use of a car, van, pickup truck, or panel truck will be 56.0¢ per mile – a reduction of 0.5¢ from 2013 rates. Driving for medical or moving purposes may be reduced to 23.5¢. The rate for service to a charitable organization still remains 14¢ a mile.
With many Americans still struggling financially, this 1/2 cent reduction is not welcomed news. However, if we objectively look at the prices for gasoline, one should be able to understand the rational.
For those who need a reminder of the “Rules”, below are the requirements focusing the standard mileage rate:
Requirements for using the standard mileage rate
To use the standard mileage deduction, (1) you must own or lease the vehicle (i.e. you cannot be an employee using an employer-provided vehicle) and (2) you must have used the standard mileage deduction in the first year the vehicle was placed in service. After the first year, you can use either the standard mileage rate or actual expenses. However, if you lease the vehicle, you must continue to use the standard mileage rate for the term of the lease.
You cannot use the standard mileage rate if any of the following applies:
- You operate five or more vehicles (i.e., a fleet) at the same time
- You claimed actual expenses for a vehicle you leased
- You claimed depreciation on the vehicle using a calculation method other than straight line
- You claimed a Section 179 deduction on the vehicle
Employer reimbursements
You cannot deduct the cost of using your vehicle for business purposes if your employer reimburses you for these expenses. You do not have to report the reimbursement allowance or the expenses on your tax return, and your employer will not report the reimbursement as income on your W-2 form as long as you provide a record to your employer showing the time, place, and business purpose of the vehicle expense being reimbursed.
Tip: If you’re reimbursed at a rate below the standard mileage rate, the difference may be deducted on Schedule A. If you’re reimbursed at a rate above the standard mileage rate, the difference is treated as taxable wages to you.
