Your Driving Deductions for 2015 / Tax Break for Work-Related Use of a Car Will Improve Next Year

Tom Herman for the Wall St Journal writes:  If you use your car for work, you may be eligible for a tax break that will be slightly more generous in the new year.

You may also qualify for a deduction if you use your vehicle to help a charity, or for medical or moving purposes. But be sure to read the fine print. As with so many tax laws, this one can be tricky.

Most taxpayers have a choice: They can deduct certain actual expenses of operating a vehicle, or they can use standard mileage rates published by the Internal Revenue Service. In addition to using the standard rate, they can deduct “any business-related parking fees and tolls,” the IRS says in Publication 17. But “parking fees you pay to park your car at your place of work are nondeductible commuting expenses.” 

Most people use the standard rate, because it’s easier. But don’t make your choice without considering whether you would be better off deducting actual expenses. For many drivers, that’s a better choice.

Here are the recently announced optional standard mileage rates, starting Jan. 1, 2015, for use of a car, van, pickup or panel truck:

For business miles driven, the rate increases to 57.5 cents a mile, up from 56 cents in 2014.

For medical or moving purposes, the rate will be 23 cents a mile, down half a cent from this year.

 

For charitable purposes, the rate will be 14 cents a mile, unchanged from this year.

The IRS said its 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 expenses, which will decline slightly next year, is based on “the variable costs, such as gas and oil.” The charitable rate, which won’t change, is set by statute.

For more details, including what actual expenses may be deductible, see IRS Publication 17. Actual car expenses include such items as depreciation, licenses, gas, oil, insurance, and garage rent, the publication says.