Here’s some good news. That surge in gasoline pump prices over the past year has prompted the IRS to increase some of the mileage deduction rates in 2022.
Beginning January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) are:
58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021.
18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021.
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.
These possible deductions should not be overlooked and they can add up to big bucks.
Let’s take the business mileage deduction of 58 and a half cents per mile. Just a ten-mile trip — five miles in each direction — is $5.85 and what business destination is only five miles away?
The business mileage deduction does not apply to your basic commute from your home to your job. But if you work two jobs — and many freelancers and independent contractors do — the business mileage deduction applies to driving from one job to another. It also applies to your job search and driving to interviews. And you can add parking fees and tolls to your mileage costs.
The IRS wants you to keep accurate records so keep a notebook in your car. Each time you make a deductible trip write down the date, your starting odometer reading, the ending reading, and the total miles driven. Note the purpose of the trip. Has an envelope taped to the notebook to hold parking receipts? Be sure the dates are visible.
You can use this same notebook system for medical trips. Medical trips include doctor visits, trips to the pharmacy, even trips to the eyeglasses store to buy a pair or to have an adjustment made on the frames.
When you drive to a Goodwill or Salvation Army donation location, the mileage is deductible. Enter this info in your notebook too.
At the end of the year that can be a very valuable notebook. And that envelope of parking receipts can also be very valuable.
I know people who have driven 300 miles for a second opinion on medical treatments and people who work two jobs every day and for them, 18-cents per mile and 58.5-cents per mile are real money.
Remember, it’s always advisable to consult a tax expert or tax attorney when you are dealing with tax issues or seeking tax debt relief or an offer in compromise. A tax expert or tax defense attorney is best suited to handle disputes because they know the laws and know how to deal with tax authorities.
Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues.