If you use your vehicle for your business, medical or charitable purposes, you may be able to deduct vehicle expenses on your 2019 tax return.
Standard Mileage Rates
On December 31, 2019, the Internal Revenue Service issued the standard mileage rates for 2020. These rates are used by many taxpayers to calculate the deductible costs of operating an automobile for business, medical, charitable or moving purposes.
Beginning January 1, 2020, the standard mileage rates for the use of an automobile will be:
- 57.5 cents per mile driven for business use (reduced from 58 cents in 2019).
- 17 cents per mile driven for medical use (reduced from 20 cents in 2019).
- 14 cents per mile driven in service of charitable organizations (set by statute and remains unchanged).
- 17 cents per mile driven for moving purposes (reduced from 20 cents in 2019).
For business use, there are two ways that a taxpayer can use to calculate the cost of using a personal vehicle in their business: 1.) The Actual Expenses method or 2.) Standard Mileage method. Each method has its pros and cons, and they often produce vastly different results. If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business by the due date (including extensions) of your return. You can’t revoke the choice. However, in later years, you can switch from the standard mileage rate to the actual expenses method. If you change to the actual expense method in a later year, but before your car is fully depreciated, you must estimate the remaining useful life of the car and use straight line depreciation.
The Tax Cuts and Jobs Act of 2017 suspended the mileage deduction for moving expenses until 2026 unless the following apply:
- Taxpayer must be a member of the Armed Forces of the United States.
- Taxpayer must be on active military duty.
- Taxpayer must be under military orders to move to a permanent change of station.
Also, under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses.
If you have any questions or would like to learn more, please contact one of our tax professionals to assist you.