- Days left
Starting July 1, 2008, the standard mileage rate for business miles is being increased to 58.5 cents per mile. The rate is currently at 50.5 cents per mile. Over the years, the IRS has somewhat tried to keep up with increasing fuel costs, but they're probably a little behind at this point.

The standard mileage rate is important because it's used by a lot of businesses to reimburse employees for their miles driven for company purposes. Self-employed people also use this rate for their business mileage.

With rapidly rising fuel costs, however, some taxpayers may be better off using "actual expenses" for claiming their auto expenses on their taxes. Using this method requires the taxpayer to track information in addition to the miles driven. They have to track the cost of the vehicle, fuel, service, repairs, and insurance. Those actual expenses are then allocated to personal miles and business miles. While this method is more of a hassle, it can often yield a bigger deduction for the taxpayer.

There is a catch though: If you start using the actual expenses in the first year you put your car "in service" for business purposes, you can't switch to the standard mileage rate in later years.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.


Increase your money and finance knowledge from home

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

TurboTax Articles

Incentive Stock Options

Some employers use Incentive Stock Options (ISOs) as a way to attract and retain employees. While ISOs can offer a valuable opportunity to participate in your company's growth and profits, there are tax implications you should be aware of. We'll help you understand ISOs and fill you in on important timetables that affect your tax liability, so you can optimize the value of your ISOs.

What is a 1098-E: Student Loan Interest

If you're currently paying off a student loan, you may get Form 1098-E in the mail from each of your lenders. Your lenders have to report how much interest you pay annually. Student loan interest can be deductible on federal tax returns, but receiving a 1098-E doesn't always mean you're eligible to take the deduction.

Add a Comment

*0 / 3000 Character Maximum