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For anyone expecting to claim mileage on their taxes in 2022, it’s an exciting time. The IRS is preparing to release the mileage rate. Let’s discuss what you need to know about the IRS mileage rate and what you should expect from the IRS this year.
If they don’t, you could be missing out.
Factors Impacting the IRS Mileage Rate Deduction for 2022. Contrary to popular belief, there are a lot of factors that go into the IRS determining their mileage rate for the year. Yes, fuel prices are still a big factor, but it’s far from the only influence.
Fuel Prices
Fuel prices remain a major factor. The problem is it’s hard to predict what the mileage rate will be due to conflict in the Middle East and falling demand. It’s unclear how these prices will impact the mileage rate for 2022.
Maintenance Costs
The IRS also takes into account maintenance costs on vehicles. Even brand-new cars still need to have the oil changed every few months. If you drive your vehicle more, the maintenance costs will rise.
Vehicle repair costs are increasing every year, so this is an increasingly important factor in determining the IRS mileage rate.
Vehicle Insurance Costs
Another cost that’s increasing is auto insurance. There are a number of reasons for this, such as the number of accidents on the roads and the number of minor accidents caused by distracted driving.
You’re paying for this cost whenever you get behind the wheel. That’s why the IRS also factors in insurance costs.
Vehicle Costs
Vehicle costs have increased as well, with Americans spending more than ever before on cars. Cars are changing and the demands of cars are changing. With so many new, advanced features on newer vehicles, Americans are continuing to spend more.
Vehicle upgrades are expensive and so the IRS is taking it into account.
2019 saw an increase in the mileage rate deduction from 0.53 to 0.58, but if we look at previous years this isn’t an indicator that the 2022 rate will either rise or fall. So, the new mileage rate will be a surprise to everyone when it’s finally announced.
There are a few reasons for this:
You may want to look into other options, such as the Fixed and Variable Rate (FAVR) reimbursement. This is the only program recommended by the IRS as it takes into account both the variable and fixed costs of using a vehicle for business use.
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