Happy New Year: What's Your Odometer Reading?

Indeed! Happy New Year to All!

With the new year comes the major shifting of our calendars, planners, and recordkeeping from the previous year into the new year. For those of us in the performing arts, this may have significance as we track expenses and expense generating activities. One the major expenses for many are the costs of operating a vehicle for our business purposes.

In December 2015, the Internal Revenue Service (IRS), issued the 2016 optional standard mileage rate that is to be used to calculate the deductible costs of operating an automobile for business purposes. Beginning on January 1, 2016, the standard mileage rate for the use of a car (also vans, pickups or panel trucks) is 54 cents per mile for business miles driven. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The decrease of 3.5 cents per mile from the 2015 optional standard mileage rate is, no doubt due, to the general decrease in gas prices seen in late 2015.

It may also be good to note here, as many of us are asked to volunteer our time, that the 2016 rate for miles driven in service of charitable organizations is 14 cents per mile driven.

HELPFUL TIP: It’s still early ... Be sure to write down your odometer mileage reading to document the end of 2015 / beginning of 2016. This will be helpful in calculating the number of business mileage traveled vs. your commuting and personal-use miles driven with your vehicle.

If your eyes are glazing over, be sure to consult your tax professional and refer to the details in the IRS Publication 463, Travel, Entertainment, Gift and Car Expenses via the IRS website.

source:  IRS Notice 2016-01