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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
        1. 4/2/2008 9:46 PM blackebob wrote:
          I am a lineman, and I understand that I cannot deduct my daily commute. However, I am often required to return to work after hours, and on weekends for trouble calls. These trips are at any given time of day or night. I was told I can deduct anything out side of my daily commute for a 24 hour period. Is that information correct?
          Reply to this
          1. 9/5/2008 2:33 PM David Greenslit CPA wrote:
            I'd say the frequency of your commutes doesn't change the rules that apply to commuting. No, it's not deductible.
            Reply to this
    • 4/15/2008 1:10 AM Mark L wrote:
      I worked 2 temp contracts in 2007, one from Jan. - May, the other from July - Dec. They were working for different agencies at different client sites. Are my commuting costs to them deductible?
      Reply to this
      1. 9/5/2008 3:22 PM David Greenslit CPA wrote:
        You can deduct driving costs, once you reach your place of business. If the temp agency is your place of business, and you drive there, and then to the work location, the driving costs from the agency to the work location could be argued to be deductible.

        If the case is, your work sites are considered temporary, I'd say you could deduct all your driving costs. For people in construction, for instance, sheet-rockers, I advise them to deduct their driving costs because their work locations are temporary. This 'implies' that your place of business is your home.

        So we have at least 2 rules here: the Place of Business rule, and the Temporary Work Sites rule. The two rules may not mesh together perfectly. I'd say there is an argument to be made for the deduction, if you had numerous work sites. The deduction would be made on schedule A.


        Reply to this
    • 4/15/2008 9:57 AM jp wrote:
      How do u claim or what rate do you use for mileage and depreciation and maintenance when your employer pays for your gas, that is, a company issued gas card ?
      I am at a loss for how to proceed.
      Reply to this
      1. 9/5/2008 3:44 PM David Greenslit CPA wrote:
        I am going to make some assumptions: Your employer pays for the gas that you use for business and not for the gas you use for personal use of your car. That payment is made under an "accountable plan" which means you document the use, which varies from month to month. Since the payment for the gas to you does not show up on your W-2 as wages, you could then deduct the standard mileage rate times the number of miles. You then must subtract from this deduction, the payment made to you by your employer.

        You need to determine what if anything is showing up on your W-2 from these payments. If the full amount paid is showing up, then deduct your business miles times the standard mileage rate.

        You can use actual vehicle costs. You figure your total vehicle costs for the year, and then multiply that by a ratio that is: Business Miles / Total Miles. I'd advise you to depreciate your vehicle when using the actual cost method. The standard mileage rate method is simpler.

        All this assumes, you have business mileage. Commuting costs are generally not deductible.
        Reply to this
    • 6/3/2008 9:46 AM Heidi wrote:
      Hi, my husband is a Podiatrist (an employee of an S Corporation)who has an office 5 miles from our home, works at a surgery center and hospital and travels to an office 20 miles away. I am the bookkeeper/administrative assistant for the S corporation and work exclusively out of our home. He brings work to me when he comes home at night and I send work back with him in the morning. The S corporation has recently been through an audit and the IRS is questioning the commuting miles from the local office to our home. Based on the fact that our home office is the principal location for me for bookkeeping, is there a way to justify those miles? My husband also regularly fields calls from patients and other physicians at home as well as preparatory work for surgeries and presentations.
      Reply to this
      1. 9/5/2008 4:12 PM David Greenslit CPA wrote:
        I'd say, it boils down to 'his' place of business. You and him can have different places of business in my opinion. If his place of business is the office 5 miles away, that would seem to rule out mileage to and from his home. But he has an employee he is deliverying work to. I'd think that the IRS has seen this situation before and will make the argument that the fact that he is driving to his home is more important than the fact that an employee is there. He can generally not bring work home for himself and have a deduction. He could deliver work to other places though and get the write-off. It's not clear to me if you have a deduction here? If his 'place of business' is his home, I'd say the deduction would be good however.
        Reply to this
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