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