IRS Standard Mileage Rates for 2023
The Internal Revenue Service announced its standard mileage rates for 2023 — How will it affect your deduction?
Some positive changes are in store for the 2023 tax year, which means it's time for all drivers to get informed on the IRS standard mileage rates for 2023. Below we’ve outlined some frequently asked questions regarding taxable mileage, including ways in which MileIQ can help you earn top dollar on your next tax return.
What is the IRS standard mileage rate?
The IRS standard mileage rate is instrumental in calculating the deductible costs of operating a vehicle for business, charity, medical, or even moving purposes (only if you are an active and eligible military member). Taxpayers can thereby use these standardized rates to calculate exactly how much their mileage deduction is worth in the 2023 year.
The IRS standard mileage rates for 2023 are listed as followed:
- 65.5 cents per business mile, which is up 3 cents from the midyear increase of the second half of last year. It takes effect on January 1st, 2023.
- 22 cents per mile for medical or moving purposes, consistent with the midyear rate set for the second half of 2022.
- 14 cents per mile for charitable causes; the rate is set by statute and remains unchanged.
How do you write off mileage in 2023?
In order to write off mileage in 2023, it is necessary to keep a detailed log of all miles traveled for business, charity, medical, or moving purposes. It might sound tedious at first, but there is an easy way to stay organized: download a mileage-tracking app. With MileIQ, your smartphone will use Wi-Fi, GPS, and mobile data to track your business miles and ancillary driving routes during the work week. Therefore, when the time comes to reimburse those yearly expenses, you’ll have a detailed log without ever thinking twice about where you went, on what day, and why.
Is there a limit to how much mileage you can claim on your taxes?
In accordance with the tax reform bill of 2017, self-employed workers can still write off business miles in 2023, whereas W2 employees are no longer qualified to do so. What’s more, there is no set limit on how many miles you claim on your deduction as long as they are backed by sufficient records. Here are common instances when mileage deduction is warranted:
- Traveling between two work destinations
- Meeting clients, potential customers, etc.
- Any errand or requested trip on behalf of a business or employer
It’s important to note that any distance traveled, let’s say between your home and work, does not qualify as deductible miles. Consequently, you cannot use the IRS standard mileage rates for 2023 to leverage more miles than factual evidence proves. With the utility of a mile-tracking app, you can classify drives, manage location names, and make sure every mile is organized from time and date.
Here are MileIQ’s time-saving tips for mileage tracking: https://www.youtube.com/watch?v=6j0i3EZOnQg
What if I don't keep track of my mileage in 2023?
Unfortunately, the decision to not maintain a yearly mileage log will reflect poorly on your deduction. It simply will make things harder to prove and in turn, leave you with less of a chance of earning top-dollar on your reimbursement. In most cases, you’ll be required to give an oral testimony and hand over any receipts, emails, or additional proof of travel during business hours to help justify a deduction without proper documentation.
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