What Should Know about Reimbursed Mileage Rate. (Photo: Marca)
A commuting or business trip helps you get the most out of your tax return. If you drive for business regularly, start tracking your mileage rate so you can deduct the IRS-mandated cents per mile rate.
What Is the IRS Standard Mileage Rate Alluding To?
The IRS standard mileage rate is a recommended reimbursement rate for businesses for employees who use their vehicles to conduct business on their employer’s behalf.
Mileage Rate Reimbursement in 2023
The IRS announced that the standard mileage rates for cars, vans, trucks, or other business vehicles would increase in January 2023.
- 65.5 cents per mile for business use. This business mileage rate increased by 3 cents per mile in 2022 from 62.5 cents per mile.
- Military medical or moving expenses are calculated at 22 cents per mile. Qualified active-duty Armed Forces members can deduct these miles.
- Charitable organizations are charged 14 cents per mile.
READ ALSO: IRS Transcript 2023: What Is Code 150 On IRS Transcript Means?
What Should Know about Reimbursed Mileage Rate. (Photo: Expenses Hub)
How to Calculate Mileage Costs
Understanding how to calculate mileage rate is essential to get the most out of your refund. The following is a breakdown of the two most common uses of the standard mileage rate: self-employed tax deductions and employee mileage reimbursements.
Self-employment Tax Breaks
It is critical to track your mileage for the tax year, and this is how you would calculate your miles when filing your taxes.
- Compile your mileage. In this case, your total mileage is 500 business miles.
- Multiply that figure by the $0.655 standard business mileage rate.
- 327.5 is the result of 500 business miles multiplied by $0.655.
- Your tax break would be $327.50.
Employee Mileage Reimbursements
You can also get reimbursed by your employer by performing the exact calculation of multiplying your business miles by the standard mileage rate.
However, if you frequently drive for work, you should be compensated for a percentage of your mileage — so make the most of it.
Finally, Keep Track of Your Mileage
The cost of all the miles you drive for work must come entirely from your pocket. Be sure to figure out how many miles you’ve driven for business before the end of the fiscal year.
READ ALSO: 2023 IRS Tax Refund Calendar – Here’s What You Need To Know
