The 2018 Mileage Rate of the IRS Standard Mileage Deduction

Photo courtesy of Pexels Images by Ingo Joseph

The Internal Revenue Service (IRS) has enforced the optional 2018 mileage rate right at the beginning of 2018. These are used to calculate the deductible costs of operating vehicles for business, medical, moving, and/or charitable purposes.

The standard 2018 mileage rate for the use of a car, van, pickup, truck, or any other sort of automobile are:

  • 54.5 cents per mile driven for business purposes (from 53.5 cents in 2017)
  • 18 cents per mile driven for moving or medical purposes (from 17 cents in 2017)
  • 14 cents per mile driven for charitable purposes (remains unchanged)

These rates change depending on an annual study on the fixed and/or variable costs of operating a vehicle. The fixed costs include repairs, maintenance, tires, insurance, depreciation, and the variable costs include gas and oil.

The 2018 mileage rate for businesses is based on both fixed and variable costs, while the rates for moving or medical purposes are based on the variable costs only.

How to Calculate the Rates with Easy Math

You can use more than one rate on your tax return, if you use your car for different purposes.

Let’s say for example, you drove 10,000 miles in 2018. 4,000 miles of your journey was for personal reasons (recreation, family, etc), 1,000 miles were traveled for charitable purposes, and 4,000 miles were traversed for business use, and the last 1,000 miles were for reasons of a medical nature.

The calculation for your deduction (which you will be filing in 2019) would be:

4,000 personal miles x 0 = 0

1,000 medical miles x .18 = $180

1,000 charitable miles x .14 = $140

4,000 business miles x .545 = $2180

The total mileage-related expenses that you can deduct would be $2,500, plus additional related charges such as toll fees and paid parking.

Under the law, taxpayers have the option to deduct their actual expenses of using their vehicle, rather than using the 2018 mileage rate. That, however, is a lot more work than you might be willing to bother with.

The 2018 Mileage Rate and the Past Years

The table below displays the rates for business miles for the past 8 years, from 2010 to 2017, and then 2018. Note that these rates were influenced by variable factors, most of which are uncontrollable, such as fuel prices.

Year Rate per Mile Dates Covered
2018 54.5 cents 1/01/18 – 12/31/18
2017 53.5 cents 1/01/17 – 12/31/17
2016 54 cents 1/01/16 – 12/31/16
2015 57.5 cents 1/01/15 – 12/31/15
2014 56 cents 1/01/14 – 12/31/14
2013 56 cents 1/01/13 – 12/31/13
2012 55.5 cents 1/01/12 – 12/31/12
2011 55.5 cents 1/01/11 – 12/31/11
2010 50 cents 1/01/10 – 12/31/10

How to Qualify for Mileage Deduction

There is no set limit for the amount of mileage you can claim on your taxes, given that you have followed the rules and that you can provide a compliant mileage log.

To qualify for the 2018 mileage rate deductions, your mileage log must include a thorough, accurate record of:

  • The dates of your trips
  • Your starting point
  • Your destination
  • The purpose of your trip
  • The person in need of medical care (medical deductions)
  • The recognized charity you are driving for (charitable deductions)
  • Your automobile’s starting mileage
  • Your automobile’s ending mileage
  • Tolls or other trip-related costs

The IRS will want to know the total number of miles you drove during the year for business, commuting and personal use, medical, and charitable purposes.

The best way to provide proof to the IRS how much you drove for business is to keep contemporaneous records. It means your records are created each day you drive, or at least soon afterwards.

Keeping receipts and a perfect record of your expenses is of the utmost importance.

The easiest way to log, calculate and export your business expenses is to use your smartphone and an app like GOFAR.

A better way to log for your 2018 mileage rate deductions

The Red Flags for the IRS

While there is no limit to the amount of miles you can reduce from your taxes, there are some claims that can send warning signals to the IRS.

These include:

  • Having a rounded-out number, like 30,000 miles
  • Claiming that all of your miles are for business
  • Claiming an irregularly high number of miles

Business Mileage vs Medical Mileage vs Charitable Mileage

If you are an employee, your commute to your regular place of business cannot be placed under the 2018 mileage rate for businesses.

If you are self-employed, any driving you do that is directly related to your business may be deducted in your taxes as business mileage.

These is the list of travel types that are considered under the business category by the IRS:

  • Travel between offices – the miles travelled between your office to another office or work can be written off. Commuting to work is not qualified, even if you are working while commuting.
  • Errands/supplies – travelling for business-related errands, such as purchasing supplies or going to the bank. These minor trips pile up, and many business owners fail to keep good track of these travels.
  • Business meals and entertainment – drives to meet clients or vendors are accepted by the IRS. This can include drives for dinner, drinks, etc. – as long as they are part of your business.
  • Trips to the airport – the miles you drive to and from the airport can be written off if the purpose is for a business trip.
  • Odd jobs – drives to and from odd job locations or side-gigs, such as babysitting, pet care, lawn work, etc., can be deducted as well.
  • Customer visits – trips from your office to another work location to meet with customers or clients also qualify.
  • Temporary job sites – driving from home to a temporary work location that would last less than a year can be written off.
  • Job seeking – miles driven to find a new job qualifies for mileage deduction. However, this only applies if you are looking for a job in a new industry for the first time.

Medical miles, on the other hand, can be claimed for drives with the purpose of receiving medical care – this includes you, your spouse, or your children.

The amount of this deduction is added to your medical deduction, which applies only if your total medical expenses exceed 7.5% of your adjusted gross income.

Finally, you can claim charitable mileage for the driving you perform in service of a recognized charitable organization.

Mileage Logs – Hard Copy or Soft Copy?

To quickly answer the question, IRS accepts both hard copies and soft copies, as long as the information you provided in your logs are complete.

It is advisable to keep your mileage sheets because you might need them up to five years after you file a deduction, in case the IRS has an inquiry on your records.

Bearing that in mind, a physical mileage book can get lost or damaged or misplaced more easily.

Keeping a digital copy on your PC, USB drive, mobile phone, or even a cloud-based storage system like Google Drive will ensure that you have access to your logs on demand, without risk of losing them.

If you find manually recording your logs too time consuming, try one of the better automatic mileage tracking apps like GOFAR.

GOFAR can help you kate note of how much your 2018 mileage rate deductions are

Deducting Using Your Actual Expenses Instead of the Standard Mileage Rate

As already mentioned, taxpayers have the option to deduct their actual vehicle expenses, but you will need a thorough record of all vehicle-related costs, including scheduled maintenance and emergency repairs.

From there, you will need to define what percentage of your total mileage is qualified as business mileage, medical mileage, and charitable mileage, and then deduct that percentage on your taxes.

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