In response to rapidly rising gas prices, the IRS took the unusual step of raising standard mileage rates mid-year (they are normally only adjusted for inflation once a year). year). The mileage rates that have been increased are used to calculate tax deductions for the use of an automobile (i.e. car, pickup truck or van) for business, medical and certain move. The new tariffs will apply from July 1 to December 31, 2022, while the previously established tariffs will continue to apply during the first half of the year.

Three of the four mileage rates will increase by 4¢ per mile (one of the rates will not change at all). For the second half of 2022, the standard kilometer rate for business use of an automobile will increase from 58.5¢ to 62.5¢ per mile. Deductible travel and medical travel expense rates for active duty military members will increase from 18¢ to 22¢ per mile. The mileage rate for charitable use of a passenger car remains at 14¢ per mile, as it is set by law and not subject to adjustments for inflation.

Standard mileage rates for 2022

In addition to calculating business expense deductions, the business mileage rate is also used by the federal government and many businesses to reimburse employees for business use of their personal vehicle.

Tax deduction for the professional use of a vehicle

Any self-employed person who makes deliveries, visits a customer, or otherwise uses a personal car, van, or truck for business purposes can claim a tax deduction for the business use of their vehicle. There are two ways to calculate the deduction – you can use the standard mileage rates listed above or your actual car expenses.

If you choose to use the actual expense method, simply add up all of your car-related expenses for the year – gas, oil, tires, repairs, parking, tolls, insurance, registration, lease payments, depreciation, etc. – and multiply the total by the percentage of the total number of kilometers driven that year for professional reasons. For example, if your total annual car expenses are $5,000 and 20% of your miles were for business reasons, your deduction is $1,000 ($5,000 x 0.2).

Note that the itemized deduction for unreimbursed employee travel expenses has been suspended until tax year 2026. As such, the standard company kilometer rate cannot be used by employees to claim a deduction for their work-related travel expenses. However, “over the line” deductions for business-related expenses have not been suspended. So, for example, members of the National Guard or military reserves, state or local government officials paid on a fee basis, and some performers can still deduct unreimbursed employee travel expenses and use the company standard mileage rate.

Tax deduction for medical travel

If you itemize deductions on your tax return, you can claim unreimbursed medical expenses that exceed 7.5% of your adjusted federal gross income. The list of medical expenses that qualify for the deduction is long and includes obvious expenses, such as doctor’s bills, drugs, blood tests, bandages, crutches, dental care, oxygen, nurses, etc But it also includes the cost of transport mainly and essential to medical care.

If you use your own automobile for a medical trip, you can deduct actual expenses such as the cost of gas and oil, but you cannot include depreciation, insurance, general repairs, or out-of-pocket expenses. ‘maintenance. Similar to the deduction for business use of your car, you can choose to use the standard medical mileage rates above instead of using your actual expenses. In any case, you can also add parking fees and tolls.

According to the IRS, expenses you cannot deduct include:

• Getting to and from work, even if a medical condition requires unusual transportation;
• Traveling for purely personal reasons to another city for an operation or other medical treatment.
• travel which is merely for the general improvement of your health; and
• The cost of using a specially equipped car for non-medical reasons.

Tax deduction for moving expenses of military personnel

Previously, anyone could deduct employment-related moving expenses if your new workplace was at least 50 miles farther from your old home than your old home was from your old workplace. . However, the new Tax Reform Act of 2017 removed the moving expense deduction, but with one exception: if you are an active member of the United States Armed Forces, the cost of any moving associated with a permanent change of station is still deductible if the move was due to a military order. This benefit for military families includes a move from your home to your first active duty station, a move from one permanent duty station to another, and a move from your last duty station to your home or to a higher point. close to the United States.

You can deduct unreimbursed expenses to get you and your household goods to the new location. If you are driving your own car for a 2022 move, use the standard mileage rates above plus what you paid for parking and tolls. When it comes time to file your tax return, use Form 3903 to account for your moving deductions.

Tax deduction for the charitable use of a car

Most people are generally aware of the charitable donation tax deductions available to itemizers, but there is one often overlooked aspect of the deduction. In addition to cash donations or unused items in your home, you can also deduct out-of-pocket expenses incurred while working for a charity. This includes costs associated with driving your car for charity. For example, you can deduct car expenses if you use your own vehicle to transport food and supplies to a non-profit organization’s soup kitchen.

As with the other car-related expenses described above, you can track your actual costs or use the standard mileage rate to calculate your deduction. And, of course, don’t forget to add the cost of parking and tolls.