The IRS recently made an exciting announcement about the federal standard mileage rates for 2023. Hold onto your seats! Here are the details:
For business purposes, you can now claim a rate of 65.5 cents per mile. That’s an increase of 3 cents from the midyear adjustment that set the rate for the second half of 2022. Cha-ching!
Qualified active-duty members of the Armed Forces who are on the move for medical or relocation purposes get to enjoy a rate of 22 cents per mile. This aligns with the increased midyear rate set for the latter half of 2022. Way to go, heroes!
When it comes to charitable endeavors, the rate remains unchanged at 14 cents per mile. It’s a flat rate set by statute, so you can rest easy knowing there’s no monkey business here.
Now, let’s get down to business. How can you make the most of these mileage rates for your taxes? It’s as easy as pie! Just keep a log of your business mileage throughout the year, multiply that number by the business rate, and voila! You’ve got yourself a deduction.
But wait, how does the IRS come up with these mileage rates? They’re no magicians, but they do understand that running a vehicle for business comes with its fair share of costs. To help out hardworking taxpayers, the IRS calculates the standard mileage rate by considering both fixed and variable expenses associated with operating a vehicle. That includes things like gas, wear-and-tear, and even good ol’ depreciation.
Hey, here’s a little secret: you don’t have to stick with the standard mileage rate if you don’t want to. You can opt for the actual expense method and deduct the real costs of running your business car. It might require a bit more record-keeping, but who knows? It might even lead to a bigger deduction. The choice is yours, my friend.
Oh, and one more thing to keep in mind: once you’ve used the actual expense method, you can’t go back to the business standard mileage rate. So choose wisely, young grasshopper, and let the tax adventures begin!