The Master's Tax & Financial Services
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2007 Mileage Rates

The IRS has just released the mileage rates for use in 2007.

  • 48.5 cents for business miles driven
  • 20 cents for miles driven for medical or moving pruposes
  • 14 cents for miles drive in service of charitable organizations (set by Congress)

The standard way of treating auto expenses is to track all expenses, figure depreciation on the vehicle, and then prorate those according to use. Frankly such is a pain to do! So an Optional Method was established that allows a taxpayer to simply calculate a certain amount per mile driven. (Mileage records must be kept anyway, since those would be used to prorate the expense.) The standard mileage ("Optional Method") takes into account operating expenses such as gas, oil, tires, plus repairs and depreciation, and also insurance. So when using this method none of those other items may be added.

There are several restrictions on using the Optional Method (mileage), including any vehicle that did not use the Optional Method in the first year of use.

Also, many people correctly understand that the high depreciation in the first couple of years provides a nice deduction in the Standard Method, but fail to realize or consider the depreciation recapture rules that will bite them later.

It is important to emphasize that "contemporaneous" mileage records must be kept regardless of the method used. (That means keeping them as they are incurred - not making them up for the year at tax time.) This does not necessarily mean writing down odometer readings all the time. We would be happy to discuss your personal situation and explore a way to keep the required records in the least intrusive manner.

Rev. Proc. 2006-49, 2006-46 I.R.B.

"Tax software is no substitute for tax knowledge."

Any views expressed herein are based on our best information. The content of this web site was written as general information without specific individual information and thus may not apply in all situations. This material was not written, and cannot be used by the taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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Janelle Ogg, EA
Richard Ogg, EA