PARSIPPANY, N.J., March 25 /PRNewswire-FirstCall/ — Every deduction counts, and so does every mile. Yet, among the most commonly overlooked tax deductions are the expenses incurred when driving a personal vehicle for business, charitable, medical or moving purposes. Jackson Hewitt Tax Service(R) is highlighting this potential break for taxpayers and reminding them that two sets of mileage rates were in effect during the 2008 tax year.
Eligible taxpayers have two options for claiming these deductions: calculating the actual cost of using their vehicles or using the standard mileage rates. Generally, the standard mileage rates are set by the IRS and adjusted as needed.
«Individuals should consider both methods for calculating this expense and determine which results in a higher deduction,» said Mark Steber, vice president of tax resources at Jackson Hewitt Tax Service. «Many taxpayers choose the simpler standard mileage rate approach, so this year it’s important to remember that there was a higher rate in effect for the last half of 2008.»
Steber added, «Failing to use the appropriate rate will result in errors in calculating the deduction – and it could even mean a smaller deduction than the taxpayer deserves.»
Two rates in 2008
Because of higher gas prices and other increased transportation costs, the IRS increased the mileage rates for business, medical and moving expenses in July 2008, resulting in different rates for each half of the year.
For eligible expenses incurred between Jan. 1, 2008, and June 30, 2008, standard mileage rates were:
— Business travel – 50.5 cents
— Travel for medical or moving purposes – 19 cents
For eligible expenses incurred between July 1, 2008 and Dec. 31, 2008, standard mileage rates were:
— Business travel – 58.5 cents
— Travel for medical or moving purposes – 27 cents
The mileage rate for charitable work, which is set by law, remained at 14 cents for the full year.
What counts
To deduct the cost of operating a vehicle for business, medical, moving or charitable purposes, a taxpayer must own or lease the automobile used for travel. Other general qualifications include:
Business travel. The cost of driving a personal vehicle for business may include travel from one work location to another; visiting customers; attending a business meeting away from a taxpayer’s regular place of work; and traveling away from home overnight on business. Expenses that are reimbursed by an employer are not deductible.
Medical transportation costs. Out-of-pocket costs for driving a personal automobile to reach a medical treatment facility can be deducted — as part of medical expenses — using the standard mileage rate. Medical expenses are deductible if the total cost of medical care is greater than 7.5 percent of a taxpayer’s adjusted gross income.
Moving expenses. The cost of driving a personal vehicle when moving to a new home can be deducted using the standard mileage rate. Moving expenses can be deducted if the move occurs within one year of starting a new job; if the new job is at least 50 miles farther from the taxpayer’s old home than the old job was; and if the taxpayer works full-time for at least 39 weeks during the first 12 months after the move.
Charity miles. Taxpayers may deduct the cost of operating a vehicle while providing services to an eligible charitable organization.
Parking fees and tolls related to these expenses may be deducted in addition to the standard mileage rate.
Steber notes that, «Whether taxpayers use the standard mileage rate or the actual cost of opera
