Guy Benhamau sends friends a photo of gas prices while pumping gas at an Exxon Mobil gas station on June 9, 2022 in Houston.
Brandon Bell | Getty Images
If you are self-employed or have a small business, you may soon be eligible for some relief from rising gas prices.
Beginning July 1, the standard mileage rate — used to deduct eligible business trips in a vehicle on a tax return — increases from 4 cents to 62.5 cents per mile, According to the IRS, The new rate applies to trips during the second half of 2022.
The rate for medical trips or active-duty military moving will also increase by 4 cents, allowing eligible filers to claim 22 cents per mile. But the rate for charitable organizations remains unchanged at 14 cents.
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“The IRS is adjusting standard mileage rates to better reflect the recent increase in fuel prices,” IRS Commissioner Chuck Rattig said in a statement.
The change comes as gas prices continue to hit records, Swelling to more than $5 per gallon nationallyThe war in Ukraine broke out partly due to increased demand and shortages.
annual inflation increased by 8.6% in MayAccording to the US Bureau of Labor Statistics, the highest increase since December 1981, with rising fuel costs contributing significantly to profits.
Midyear mileage changes are ‘unusual’
“A mid-year change in the standard mileage rate is unusual for the IRS,” said Tricia Rosen, principal certified financial planner at Access Financial Planning in Andover, Massachusetts.
She explained, since 2008 there has been a semi-annual change only three times, with the most recent change in 2011. Each happened after a hike in gas prices, she said.
It is unusual for the IRS to have a mid-year change in the standard mileage rate.
Tricia Rosena
Principal at Access Financial Planning
To claim the deduction, have a good driving record
While it is always important to track mileage, including travel dates, it will be even more important in 2022 to ensure that the correct rates are applied to each trip, Rosen said.
The standard mileage rate is not mandatory according to the IRS. Taxpayers also have the option to calculate the actual costs, which involve deducting a percentage of the total cost of the vehicles. But either way, you’ll need to keep detailed records.
“The IRS wants to see a logbook of business, medical and personal miles to prove that you are entitled to the deduction,” said Laureate Dearden, a CFP and CPA at the firm in Laurel, Maryland.
You must show the start and end mileage, the trip for business or medical purposes, and the date in your logbook. But in reality, very few people keep such records, she said.
However, you can use a mobile app to automatically track mileage, which can make it easier at tax time, she suggests.