Updated: October 3, 2018 The Mileage Rate 2016 is¬†important for anybody looking for a¬†driving-related deduction. This is also often called the Standard Mileage Rate and is worth 54 cents per mile for business-related drives in 2016.
The standard mileage rate adjusts over time. The IRS hasn't revealed the exact inputs to determine the rate but it factors in gas prices, costs of running vehicles, depreciation and more. In fact, the IRS can change the rate mid-year if gas prices are swinging dramatically. Below were the mileage rates for 2016.
You can use the federal mileage rates 2016 to take a tax deduction on your returns. Calculating your deduction is simple: multiply your miles by the applicable rate. If you drove 20,000 business miles in 2016, your deduction would be $10,800 (20000 x .54 = $10,800). The same principle applies to finding your charity and medical mileage deduction.
The IRS understands there is a cost associated with using a personal car for work, medical or charitable reasons. The IRS mileage rate allows people to potentially receive a deduction from their taxable income. The standard mileage rate factors in many things like depreciation, gas, maintenance and more.
If you ever face an IRS audit, your mileage deduction must have an accurate mileage logbook to back it up. For business mileage, you must keep a record of:
You'll also need to provide the IRS with the total number of miles you drove during the year. This must include your miles for business, commuting and personal driving. Charity, Medical and Moving are considered personal driving even though each has deduction potential.
The IRS doesn't force companies to follow a mileage reimbursement rate. Many businesses do align their reimbursement rate with the standard mileage rate, though. This helps to attract and keep users. Consider two equally good jobs and both require you to drive your personal vehicle for work. Wouldn't you likely take the job that includes a reimbursement for miles? Many businesses will reimburse employees 54 cents per mile for every drive associated with work. In 2017, that may go down to 53.5 cents per mile. Check with your employer.
The standard mileage rate is how you'll calculate your mileage deduction. The federal mileage rate 2016 is set by the IRS every year. The standard mileage rate for business and medical changes from year-to-year. The charity miles rate has remained at 14 cents per miles for a long time.
Your business may have different reporting requirements. But, in general, most reimbursements reports must include:
Most companies tie the mileage reimbursement rate to the standard mileage rate. If your company offers less than the standard rate, you can file for a partial deduction.