New IRS business mileagerate deduction 2009

Getting out and conducting business is a basic necessity for any business person these days even with the easy of digital communications coming on like mad. Fortunately, Congress knows as much and tax law has long allowed for the deduction of costs related to driving around on business. If you are looking for a simple tax deduction that can really make a dent in your tax liability, the business mileage deduction is a pretty good choice. The deduction is organized in an easy and logic way - a real shocker considering we are talking about a tx issue. Regardless, one just multiplies your total business mileage for the year by a mileage deduction rate issued by the IRS. The resulting total is your deduction amount. The IRS has just announced the business mileage deduction rate for the 2009 tax year will be 55 cents a mile. This is an increase of 4.5 cents over the 2008 figure. So, what does this mean? Well, let's assume you drive 5,000 miles in 2009 on business. You would calculate your tax deduction by multiplying 5,000 x 55 cents to come up with a total of $2,750. Any way you slice it, that is a very nice deduction. There are a couple of things you need to keep in mind with this deduction. The first has to do with when you can claim it. The 55 cent rate applies to your 2009 mileage, not your 2008 mileage. This means that you can only use this rate when you sit down to calculate your 2009 taxes in the first quarter of 2008. What about for the 2008 year? That rate is 50.5 cents. A second cautionary note has to do with unwanted attention from the IRS. There can be a temptation to expand a bit on the miles used in calculating this deduction. Don't. The IRS is more than aware of the temptation. When it does audits, it will ask for evidence of the mileage being incurred. This means you need to keep a log detailing the mileage. If you don't, the entire deduction may be tossed out. The business mileage deduction is great because it is one of those deductions you can take year after year. To its credit, the IRS has also shown a tendency recently to adjust it to match changes in gas prices if things start getting crazy. With falling gas prices, we'll have to hope the IRS does not adjust the rate down in 2009, bit it might so keep an eye out for any changes.

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