Federal Mileage Reimbursement
Title: Navigating the Federal Mileage Reimbursement Landscape
Understanding the Federal Mileage Reimbursement
The federal mileage reimbursement allows individuals to deduct vehicle operation costs for business, charitable, medical, or moving purposes from their federal income taxes. This reimbursement, often termed the standard mileage rate, is determined by the Internal Revenue Service (IRS) and varies annually based on changes in vehicle ownership and usage costs.
Qualifications for Federal Mileage Reimbursement
Recent tax reforms have narrowed eligibility for the federal mileage reimbursement. As of 2020, deductions are applicable for:
- Business mileage for self-employed individuals.
- Medical-related mileage, provided medical expenses exceed 10% of adjusted gross income.
- Charity work-related mileage.
- Moving-related mileage for active-duty military members required to relocate.
Detailed qualifications within each category necessitate consultation with a tax professional to ascertain eligibility. It’s crucial to maintain precise records, and personal use miles are not deductible.
Federal Mileage Reimbursement Rates (2020)
For the year 2020, the federal mileage reimbursement rates are as follows:
- 57.5 cents per mile for business use.
- 17 cents per mile for medical or moving purposes.
- 14 cents per mile for charity work.
Calculating Federal Mileage Reimbursement
To calculate the deductible amount, multiply the number of qualified miles by the applicable rate. If multiple categories apply, such as charity work and medical travel, calculate them separately at the corresponding mileage rates. Some taxpayers may opt for calculating actual vehicle costs, but eligibility varies, necessitating guidance from a tax expert.