IRS Releases new Standard Mileage Rates for 2019
For business owners and independent contractors, the Standard IRS mileage rates for 2019, has been released. These new numbers are a guide to calculate deductible expenses for operating business vehicles. It is crucial to know these numbers now, so you can plan/project your business expenses accurately for the year ahead.
The IRS Standard mileage rates for 2019 is also useful for providing tax-free reimbursements to employees. If these rates are not incorporated from day one of the new year, companies might have to deal with complaints from their mobile workers about inadequate mileage reimbursements.
In a nutshell, the standard went up a little. The rate for business travel has increased 3.5 cents per driven mile, the rate for medical and moving expenses has increased two cents per mile, and the rate for charity purposes remains unchanged and is still 14 cents/driven mile. It is also important to note that taxpayers no longer can claim miscellaneous itemized deductions regarding unreimbursed employee travel expenses.
According to the IRS, the standard mileage rates, beginning January 1st, 2019 are:
- 58 cents per mile driven for business use
- 20 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
You can benefit from a mileage deduction if you’re using your vehicle for business, charity, medical or moving purposes. Keep reading to find out about the different “standard rates” for each of these purposes.
More about the new rates
These standard mileage rates set by the IRS are “optional”. It means that you can choose to not use that for calculating your deductions and choose the other method of keeping track of actual vehicle expenses. You can choose the method that gets you the maximum deductions possible and it makes sense given your specific business nature and needs.
It’s important to note that to use these standard rates, IRS requires you to keep a detailed log of each business mile driven. This may sound daunting, but with the proliferation of easy and accurate mileage tracking apps like TripLog nowadays, this is an easy decision to make for any small business or independent contractors.
Let’s take a closer look at the different kinds of mileage deductions that as a small business owner or independent contractor, you could leverage.
Business purposes include any and all business-related trips. Trips that may involve client meetings, supply runs, and basically everything in between. However, businesses cannot use the standard IRS mileage rate after using any depreciation method under MACRS (Modified Accelerated Cost Recovery System). Also, the standard rates only apply to the use of not more than four business vehicles simultaneously.
Medical and moving purposes
Medical purposes are rather self-explanatory. Businesses benefit from certain healthcare privileges, and deducting medical transportation costs is just one of them.
According to IRS, moving purposes are defined as ‘business moving’ situations, such as a change in office space. However, the new standards suspend the deduction for moving expenses for taxable years beginning after December 31, 2017, and before January 1, 2026. The suspension does not apply to members of the Armed Forces on active duty
Charity purposes revolve around all kinds of law regulated charity work. However, the employed vehicle needs to be in the service of a regulated charitable organization. In addition, the organization needs to be legitimate, and the filing process approved by appropriate authorities.
Lastly, the mileage deduction rate for charity is the lowest, only 14 cents per driven mile. Though it’s only a portion of deductible mileage, the IRS rules and regulations are somewhat more liberal for charitable purposes.