Work mileage deductions is it worth it? Not necessarily

By: Robert Johnson

In the last part of 2004, the IRS took the simple standard mileage rates and complicated them as only the IRS can do. When you file your 2005 tax return, you are going to find calculating your mileage will depend on when and why you used your vehicle. For the 2005 tax year, mileage was divided into three parts, business, medical and charitable with a special allowance for Katrina mileage. Only the internal revenue service could take something fairly simple and make it a mess.

Business miles

Standard mileage rates for business on your 2005 tax return will largely depend on when you drove. Of course, all the prior rules for business miles still apply you now must divide them up to get the correct mileage for the time period. Below are the standard mileage rates for 2005 tax form:

• January 1, 2005 –August 31, 2005- 40.5 cents per mile

• September 1, 2005- December 31, 2005- 48.5 cents per mile

These amounts apply to business miles if you did not take the MACR’s depreciation deduction, the section 179 deduction, for any vehicle used for hire or for more than four vehicles in service at the same time.

Medical Mileage

If you will be filing on medical mileage on your 2005 tax return, you will have to get out your paperwork and determine when you drove how far on it as well:

• January 1, 2005- August 31, 2005- 15 cents per mile

• September 1, 2005- December 31, 2005- 22 cents per mile

Charity

Here is where the standard mileage rate gets really confusing. On your 2005 return, you can deduct miles driven for charitable activity at three different rates:

• January 1, 2005 – August 24, 2005- 14 cents per mile

• August 25, 2005- August 31, 2005- 29 cents per mile (Katrina)

• September 1, 2005- December 31, 2005- 34 cents per mile (Katrina)

As you can see by the tables above filing, a prior year’s tax return if it includes 2005 can be a nightmare in mileage deductions. So if you are filing a late 2005 return, you need to be aware of all these changes and how they may affect your deductions.