Vehicle Donation Tax Deduction - Irs Mileage Deduction Rules For Small firm Owners
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If you own a small firm and drive a car then you'll want to study the Irs mileage deduction rules so you can maximize your deductions. Whether you know it or not, your car represents one of the largest potential sources of tax deductions for your business.
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So what do the Irs mileage deduction rules say you can write off with respect to the miles your drive? There are two areas: level firm mileage and commuting mileage.
Irs Mileage Deduction for Business
Anytime you accrue mileage for your firm you can deduct it as a firm expense. If you drive from your office to a firm meeting and back, you can deduct the round-trip mileage as a firm expense. If you drive from your office to the bank and back to your office, you can deduct the round trip mileage as a firm expense.
Now here's the neat part of this equation. Suppose the dry cleaner and grocery store are in the same shopping town as your bank. If you have to go to the bank on business, you can stop at the dry cleaner's and grocery store after you make a deposit at the bank. The mileage for the whole trip can still be deducted as a firm expense, even though you added in some personal errands. As long as the mileage has a traditional firm purpose, errands are allowed. Thank you Uncle Sam!
Irs Mileage Deduction for Commuting
According to Irs regulations, commuting mileage is not officially a deductible firm expense. Specifically, Irs wage Ruling 90-23 says, "Daily communication costs for going between the taxpayer's abode and one or more regular places of firm or employment are non-deductible personal commuting expenses."
However, there is a way you can get around this regulation. Irs wage Ruling 55-109 (often called the "two firm location rule") says, "Daily communication costs for going between two specific firm locations (whether in the same firm or different businesses) are deductible firm expenses."
So if you have both a home office and a remote office at a different location, you can deduct your commuting mileage between your house and remote office as long as you corollary inevitable rules. To clarify, let me add that your home office can be for a home-based business, such as Mlm or network marketing, or can be the home-office for your regular business, which also has a remote location.
But there's one more rub. Normally, according to wage Ruling 55-109, you would only be able to deduct a one-way trip between your house and your remote office. But there is a way to deduct the full round-trip commuting mileage. Naturally be sure that you actively engage in firm activities in your home office both before you leave for your remote office and after you come back.
Some More Details on Mileage Deduction
To unquestionably make the commuting mileage deduction work in your favor, you need to fulfill a few rules and regulations.
1. Make sure your home office is a principle place of business, which means one of these three items applies to your home office:
- The traditional value of your firm is delivered there
- You normally meet with customers or prospects there
- The traditional administration or administrative function of your firm is conducted there
As long as any of these are true of your home office, it counts as a principle place of business.
2. You must document your performance in your home office to prove that you actively engaged in firm activities before and after you go to your remote firm location. You don't need to write a book on your activities, but just jot down a few lines in a firm diary or spreadsheet. Be sure you are totally consistent by entering data every particular workday (not just for 90 days, as for the mileage log below).
3. Keep a mileage log of your driving. Make sure to log every particular trip between your home office and your remote office, and vice versa. Also be sure to document every firm mile for which you want to claim a deduction. The unquestionably great part of this is that according to Urs rulings, you only need a keep a mileage log for "a typical 90-day consecutive period" each year to decide your each year firm mileage. That's not bad. Just be sure the 90-day duration is fairly typical of your average driving habits.
What is Your Irs Mileage Deduction Worth?
Documenting your mileage and your home-business activities can seem tedious but it can create a giant firm charge that you can use as a deduction at the end of the year. In 2009 the Irs is allowing a deduction of 55 cents per firm mile driven. If you typically commute 5,000 miles a year, that's a ,750 deduction. What's more, with allowable documentation you can also deduct:
- 24 cents per mile driven for curative or enthralling purposes
- 14 cents per mile driven in assistance of charitable organizations
So putting pen to paper can unquestionably save you a bundle in taxes by creating large mileage deductions. Don't you think these mileage deductions are worth a wee extra time?
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