IRS Increases Mileage Rate Until Dec. 31, 2005 – As I predicted a few weeks ago, IRS has finally raised the standard rate for business mileage.  However, they have made the change effective a month earlier than I expected. 

For the last four months of 2005, the rate is 48.5 cents per mile.  This means you will need to show separate totals for miles driven from January 1, 2005 through August 31, 2005 (40.5 cents) and from September 1 through  December 31, 2005 (48.5 cents).

As always, this extra eight cents per mile for the final four months of 2005 may not be adequate for a lot of people; so it’s extra crucial to be keeping track of actual operating costs so that you can compare them with the standard rate deduction when you and your professional preparer are working on your 2005 1040.   If you set up sub-accounts for each vehicle in QuickBooks, getting these totals for the year isn’t a very time consuming task.

IRS has also increased the deduction for charitable and medical miles for the last four months of 2005 by seven cents, from 15 cents per mile to 22 cents.

The rate to be used for charitable purposes remains at 14 cents per mile because our imperial rulers in DC have carved that rate into stone, and not allowed IRS to increase it based on such trivial things as a doubling of gas prices.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 9/09/2005 09:30:00 PM Send this post: