The new rules set by IRS with respect to standard mileage rate for the new year will go into effect from 1st January, 2022. IRS has increased the mileage rates for people traveling for business purposes, medical purposes, military moving purposes and more. However, the rate for movement due to charitable purpose has remained unchanged.
Along with releasing the new standard mileage rate for 2022, IRS has also set some rules and guidelines under which you can and cannot claim a tax refund. Here are some of those rules:
- You cannot claim a refund if you are driving your vehicle for your personal use.
- Tax refund can be claimed only if you are traveling for business, medical or military moving purposes.
- The claim can be generated only for your personal vehicle which you own or lease.
- Every single mileage detail should be logged. That includes,
- Total Mileage of the Year
- Date of Trip
- Source and Destination of Trip
- Purpose of Trip
- To take advantage of the standard mileage rate, you must use it the first year your car is available for business usage.
- You have the option of taking actual costs or using the standard mileage rate in later years.
- If your vehicle is leased, you can only use standard mileage rate for the complete lease period to claim tax deduction.
The IRS hires an outside firm to analyze the fixed and variable expenses of running a car on an annual basis in order to determine standard mileage rates for business, medical, and military moving deductions. For the charitable use, the standard mileage rate is set by law.
