New Mileage Rates Announced By IRS For Balance Of 2022
In recognition of recent gasoline price increases, the IRS announced an increase in the optional standard mileage rate for the final 6 months of 2022.
For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.
Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes instead of relying on actual costs which require substantiation beyond maintaining a mileage log.
Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.
Limitation Of Deducting Business Mileage
Before the 2017 Tax Cuts And Jobs Act was enacted into law, many taxpayers relied on the IRS’ annual publication of the mileage rates to be used for business travel. For many taxpayers this was a significant tax deduction but the 2017 Tax Cuts And Jobs Act changes that.
Why fewer taxpayers will be itemizing in 2022:
Increase Of Standard Deduction – $12,950 for single filers; $19,400 for heads of household; and $25,900 for joint filers.
Limit On Deduction For State And Local Taxes – A taxpayer may claim an itemized deduction of only up to $10,000 ($5,000 for a married taxpayer filing a separate return) in (i) personal state and local property taxes, and (ii) state and local income taxes (or sales taxes in lieu of income taxes). Taxes paid or accrued in carrying on a trade or business are not subject to this limitation.
Limit On Deduction Of Mortgage Interest – For mortgages incurred after December 31, 2017, taxpayers may deduct interest on up to $750,000 of principal (mortgages existing before January 1, 2018 are still subject to the pre-existing law’s $1 million limit). But for all taxpayers there is no longer a deduction for interest paid on home equity loans.
Elimination Of Miscellaneous Itemized Deductions And Deduction For Moving Expenses – A taxpayer can no longer deduct miscellaneous itemized deductions which include unreimbursed employee expenses and tax preparation costs. Also the deduction for moving expenses is gone.
But for those who can benefit from deducting costs of operating an automobile for business, charitable, medical or moving purposes, here are the rates for 2022:
2022 Tax Year Mileage Rates:
|Purpose||Rates 1/1 through 6/30/22||Rates 7/1 through 12/31/22|
Time Limits For Keeping Your Tax Records
Even though your current income tax return is processed by the IRS and a refund is issued, that does not mean the IRS can later question or audit the tax return, In fact the Statute Of Limitations allows the IRS three years to go back and audit your tax return. That is why it’s a good idea to keep copies of your prior-year tax returns and supporting backup documentation for at least three years. In the case of backing of any deductible mileage, you will need to retain your travel log showing the distance traveled, who you visited and the purpose of the visit.
What Should You Do?
You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Metropolitan Los Angeles (Long Beach) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also if you are involved in cannabis, check out what our cannabis tax attorneys can do for you. And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.