|Newsletter Volume 14 (September 2005)|
Dear Clients & Friends,
I don't know if you remember a few years ago, the IRS actually lowered the mileage rate for business use of a vehicle partway through the year. They did this because they said the operating costs had dropped significantly. Well, guess what they have done now...
In a very unusual move, on September 9, 2005, the IRS announced higher standard mileage rates for September, October, November, and December 2005. The new rate is 48.5 cents per mile, up from 40.5 cents per mile. This new rate is good for the last four months of this year. It is possible that a new rate, yet to be announced, will apply to 2006. And the rate of 40.5 cents applies to the first 8 months of 2005.
Also, the standard mileage rate for medical and moving expenses for the last 4 months of 2005 has increased to 22 cents/mile, up from 15 cents/mile. The rate for contributions remains the same for the entire year, at 14 cents/mile. (It is kind of heartless and unthinking that even though it was the hurricane that caused the gas price spike, people volunteering their time to help out the victims of the hurrican get no larger an deduction per mile like everyone else does.)
I have NEVER seen such a huge increase in the mileage rate! Eight cents is fabulous! They have realized the Hurricane Katrina aftermath is here for quite some time. I think it is time for everyone to switch to much more fuel efficient vehicles!
If you use your vehicle for work, please, please, please split your mileage log between the first eight months of the year and the last four months. Remember, your log book is not on the ceiling of my office, so when I ask you how many miles did you drive, don't look up - look at your log book! All kidding aside, the primary document the IRS looks for when auditing small businesses that claim vehicle expenses is the log book. If you don't have one, please call me & I can send you one. You may also use a day planner or some other contemporary record keeping system.
There are still plenty of calendars left from my last message. Let me know how many you would like.
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