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The IRS has issued the 2007 standard mileage rates

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This entry was posted on 11/5/2006 10:40 PM and is filed under uncategorized.

From the IRS:

The Internal Revenue Service has issued the 2007 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning Jan. 1, 2007, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
48.5 cents per mile for business miles driven;
20 cents per mile driven for medical or moving purposes;
14 cents per mile driven in service to a charitable organization.

The new rate for business miles compares to a rate of 44.5 cents per mile for 2006.  The new rate for medical and moving purposes compares to 18 cents in 2006. The primary reasons for the higher rates were higher prices for vehicles and fuel during the year ending in October.
 
The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. Runzheimer International, an independent contractor, conducted the study for the IRS.

The mileage rate for charitable miles is set by statute.

 

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    • 8/7/2007 8:16 PM tony wrote:
      looking for case or information about employee commuting with personal special van or truck to carry tools for construction. that would allow the mileage deduction. I have heard or the ruling but can not find it any more. have a tax audit on the 16 of aug. 2007
      Reply to this
      1. 8/20/2007 2:40 PM David Greenslit CPA wrote:
        I am sorry for the delay in replying. I'd say you are good to take this deduction based on my practice. One of the situations where you can in effect deduct commuting costs is when you are in construction. Since you are not going to same place every day, your work location is something called temporary. When you have constantly changing work places which is typical of construction, I green light the otherwise non-deductible commuting expense. Your workplace is typically variable. There is no requirement that drive to HeadQuarters every day, and then drive to the job location in order to get the deduction from HQ to the job site. This seems reasonable on the IRS's part. All employees can deduct their driving costs once they reach HeadQuarters. To further explain this requirement, if you don't drive back to HQ at the end of day, your trip home is non-deductible, unless you are in construction or some other job relying on these same rules. 

        The IRS generally says that the existence of tools isn't enough of a reason to take this deduction, but they also give the example where you could deduct the cost of a trailer alone, if you used one of those to haul the tools. But in this case, you rely on the temporary location argument to be able to deduct your costs. See the IRS's information.

        So your argument is all on your having temporary work locations. Read up on it. Understand it. Bring the IRS's own documents that cover it to your audit. Do not concede the point if it's challenged, just say you are going to have to do more research or have a CPA look into it for you. Generally, nothing has to be finalized at a face to face audit. You can in effect fall back, and then seek help from a CPA or other resource.
        Reply to this
    • 11/16/2007 4:47 PM derald barge wrote:
      Can you deduct your insurance deductible on your house on your 2007 taxes if your house was damaged in a hail storm?
      Reply to this
      1. 11/17/2007 6:59 PM David Greenslit CPA wrote:
        Casualty Losses are only deductible to the extent they exceed 10% of your Adjusted Gross Income. There are exceptions to the this 10% limit, for instance in the case of a large disaster as happened in Florida a while back. Congress waived the 10% limit for certain areas of the country.

        Your loss before application of the above limit is the lesser of the loss in Fair Market Value due to the casualty, or the items basis (or cost). Once all the numbers are put together and run through the formulas, you will know if you have something you can deduct on schedule A. The above discussion is limited to personal (not business) losses.

        You can see above that it doesn't matter what you spend to replace or repair. I thinks it's often true that the amount spent to replace or repair, is a good estimate of the decrease in Fair Market Value that occurred.

        The amount of your deductible, can influence your loss. If all your loss is reimbursed except for the deductible, I'd say the loss approximates the deductible. If your deductible is $2000, you'd only have a deductible loss if your Adjusted Gross Income is less than $20,000.

        Insurance payments reduce any above deductible loss calculated.

        Reply to this
    • 1/19/2008 6:12 PM Heather W wrote:
      I have a question on mileage deduction. Last year, my husband was in a country music band that toured all over the country. He will be receiving a 1099-MISC for the money made in 2007. He is claiming a home office deduction. He has a separate room in our house that he uses for music only. He keeps his equipment there (amps, pedals, guitars, computer, speakers, and monitors). He conducts business through there such as phone calls, rehearsals, and practicing. He doesn't do these activities anywhere else. We have established that this is his primary place of business. He is not employed by a company just gets paid by the band leader. We are wondering if he can deduct mileage from his home (since it is his primary place of business) to the places he goes to gig? Here is the scenario- We live about 70 miles outside of nashville. The band would catch a plane to the gigs at the nashville airport. He also drove to franklin, tn to a parking lot to catch the tour bus sometimes. Can he deduct the mileage to these places since it isn't a commute? To be a commute he would leave home to go to a primary place of business. But since his home is his primary place of business and his gigs were all over the country, would his drive to the meeting spots be deductible. We are thinking that it is, but we don't want to take a deduction we can't prove. He wasn't employed by a record company and he didn't have another place where business was conducted so we are assuming that our house is his primary place of business. If you need any more info please email me at hkropog@yahoo.com. Any help would be greatly appreciated. Thanks, Heather
      Reply to this
      1. 2/16/2008 11:46 PM David Greenslit CPA wrote:
        I'd agree that his primary place of business is your home, generally making all travel cost deductible. Your argument for this deduction is improved by the fact that his job doesn't bring him to the same place each day. 'Temporary' work sites generally favor the deductible travel cost position. If you were my client, I'd green light this deduction with the caution that these deductions increase your chance of an audit somewhat. Still, I'd advise claiming the deduction.

        It is generally true that commuting cost are not deductible. If you are an employee, the above discussion does not apply to you. As a general rule, the IRS only allow travel costs from your place of business, and in this case that is making the difference, and allowing the deduction.

        Reply to this
    • 2/23/2008 8:35 AM Jenny wrote:
      My Husband has to take the train to work due to a medical condition that caused him to loose his license.

      Is he able to claim that on his taxes?
      Reply to this
      1. 2/24/2008 12:55 PM David Greenslit CPA wrote:
        In most cases, commuting expenses are not deductible. One common exception is when people work at temporary job sites. Construction workers often deduct their mileage from their home to their job site, but that isn't the case here.

        Medical costs are deductible subject to limits, but I can't see that this is a medical cost. While I would agree it was caused by a medical condition, it's my opinion that it's not deductible and falls outside what are generally accepted deductions.
        Reply to this
    • 3/21/2008 12:18 AM charles wrote:
      I have a question about mileage deductions. I work on a oil platform in the gulf of Mexico. some of the guys say that we are able to deduct mileage driven to the location we go to be taken to the platform. the location varies, usually 3 or 4 different location each year. We work in 14 or 21 day increments. We actually take a helicopter to the platform. and drive to various heliports.
      Reply to this
      1. 3/21/2008 6:23 AM David Greenslit CPA wrote:
        I think what's important is that you are working at "temporary" work sites. If there are temporary and multiple platforms, that strengthens your case I think. There are various heliports, but that's not that different from there being various park and ride lots, or various ways to get to work based upon road contruction, or even a bridge being out, as I see it.

        "If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance."  smallbusinessnotes.com

        Trying to argue that the above fits your situation is your best bet for defending the deduction. Unfortunately, this is one of the more difficult and subjective areas of the tax code.

        Mileage deductions are being taken by your co-workers, but that would be a failing argument to make to an IRS auditor, in my opinion. To be honest, it's been my experience that the IRS doesn't spend much time challanging mileage deductions, though in an the case of an audit it would be expected. So if a number of people are mis-interpreting the law and taking deductions they aren't entitled to, that does not green light the deduction in my opinion, or at my firm.
        Reply to this
    • 3/26/2008 7:47 AM Frank P wrote:
      My daughter is home teaching 2 autistic children. The school district has given her a 1099 misc with her 2007 income in box 7 at $10,162.00.
      She was a college student last year and we claimed her as an exemption on our taxes this year.
      Everywhere I've looked says she is a business owner and has to pay SE tax?
      We don't understand this as she doesn't own a business, she is just a teacher. How can she pay her share of tax without the SE tax or is that not possible. She wants to file a 1040EZ with the $10,162.00 as W-2 wages and I told her I don't think she can do that. Any help is greatly appreciated. She drives her car to these homes and estimated about 3000 miles last year. Can she deduct mileage??
      Reply to this
      1. 3/26/2008 11:26 AM David Greenslit CPA wrote:
        I can't see a successful argument being made that she doesn't have to pay the Self Employment tax. While she may not be a "business owner", I'd say someone has to pay the Self Employment tax and the school district didn't pay 1/2 of it as employers are required to do. Perhaps she really was an employee of the district, but they decided to call her a contractor? It is possible to argue she was an employee, using form 8919. The situation is subjective.

        If you decide to accept the 1099-MISC as more or less correct, the long form 1040 is required. Use schedule C to report the income. Mileage may be deductible, but would only benefit her if she's self employed, given my assumptions about her other schedule A itemized deductions, which I assume to be minimal. Use schedule SE to figure her Self Employment tax. Most tax practioners would allow the mileage deduction. It would be based on the argument that her place of business is her home, and mileage from her place of employment is deductible. It is deductible on Schedule A if she is an employee, and on Schedule C if Self Employed.
        Reply to this
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