IRS posts information on motor vehicle deductions

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By Meg Chevalier, a senior tax specialist in the Providence office of the Internal Revenue Service

By Meg Chevalier, a senior tax specialist in the Providence office of the Internal Revenue Service

The Internal Revenue Service (IRS) issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Effective for Jan. 1, the standard mileage rates for the use of a car, van, pickup or panel truck will be 57.5 cents per mile for business, which is from 56 cents in 2014; 23 cents per mile for medical or moving purposes, which is down half a cent from 2014; and 4 cents per mile for service to charitable organizations.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on variable costs such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously). Details on those and other special rules are in Revenue Procedure 2010-51, the instructions to form 1040 and various online IRS publications, including publication 17, “Your Federal Income Tax.”

Besides the standard mileage rates, notice 2014-79, posted on IRS.gov, also includes the basis reduction amounts for people choosing the business standard mileage rate as well as the maximum standard automobile cost that may be used in computing an allowance under a fixed and variable rate plan.

Those publications are available at IRS.gov or by calling (800) 829-3676.

By Meg Chevalier, a senior tax specialist in the Providence office of the Internal Revenue Service. To contact or ask her a question, e-mail miguelina.y.chevalier@irs.gov.

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