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Among the deductions individuals can claim on their taxes are deductions for automobile operating costs related to certain activities. Among the car travel a driver might be able to deduct such costs in relation to are: travel related to service to charities, travel for moving purposes, travel for medical purposes and business travel.
Now, what specific type of travel a taxpayer is claiming a deduction for has many implications. For one, it impacts what kinds of requirements they have to meet for the travel to be eligible for the deduction.
It also impacts what rate the taxpayer is to use to calculate the deduction if they use the standard mileage rate method.
When it comes to calculating the amount of a given automobile travel deduction, taxpayers generally can choose between two different methods. One is that they could use the actual costs of operating the vehicle in such calculations. The other is that they could use the standard mileage rate method. In this method, a driver calculates the deduction by applying the applicable standard mileage rate to the amount of miles they drove in the qualifying travel. The rate differs for different types of travel.
For qualifying travel related to service to a charity, the rate is 14 cents per mile for travel done in 2016. The rate for travel done in 2017 will also be 14 cents.
The rate is a little higher for qualifying travel done for moving or medical purposes. For both of these types, the rate is 19 cents a mile for miles driven in 2016 and will be 17 cents a mile for miles driven in 2017.
Qualifying business travel has an even higher rate. When it comes to this travel, the rate is 54 cents per mile for 2016 travel, and will be 53.5 cents per mile for 2017 travel.
What type of automobile travel a taxpayer is claiming an operating cost deduction in relation to could also impact what kinds of records it can be particularly important for them to have when it comes to backing up their deduction.
Additionally, when a taxpayer who claimed a deduction for auto travel ends up getting audited, what type of travel they claimed the deduction in connection to could impact what issues are central ones in their audit. Skilled attorneys can help such taxpayers with identifying and responding to the key issues in their audit.