Standard kilometer tariffs are expected to increase in 2022

After two consecutive years, the rate at which taxpayers can calculate their deductions for using a motor vehicle for business purposes will be increased to 58.5 cents per mile for the 2022 tax year, an increase of 2.5 cents per mile over the Year 2021 corresponds to valuation.

Notice 2022-03, in which the IRS announced the update on Friday, also includes the standard mileage rate for the use of a car for the purpose of medical care under Sec. 213, which is 18 cents per mile, 2 cents more than in 2021. The rate for the provision of services for a non-profit organization remains the same, which is set by law at 14 cents per mile (Section 170 (i)).

For the deduction for moving and storage costs according to 217 (g) by members of the armed forces on active duty who move on the basis of a military order and in the event of a constant change of location.

Taxpayers can use the normal business mileage for the use of a motor vehicle as a normal and necessary business expense. Or, they may actually claim reimbursable expenses if they can demonstrate the expenses, including by keeping adequate records or other sufficient evidence.

The Tax Cuts and Jobs Act (TCJA), PL 115-97, has the other separate deduction according to Sec. 67 for non-reimbursed business expenses of employees, including those incurred when using a motor vehicle. During this time, however, the normal business kilometer rate can still be used, as the employer can reimburse an employee for driving a motor vehicle for business purposes without proof of the costs actually incurred.

The portion of the business standard kilometer rate that is treated as depreciation for the purpose of calculating the cut to the base is 26 cents per mile for 2022 as it is for 2021.

The 2022-03 notice also includes the standard fixed-and-variable-rate (FAVR) maximum auto cost of $ 56,100 for cars (including trucks and vans), an increase of $ 5,000 from 2021. For an FAVR -Plan applies a standard amount demonstrating that the employer reimburses employees for the costs they incur in driving their vehicle to provide services as an employee for the employer. The same amount also applies as the maximum market value of the passenger cars made available for the first time in the calendar year 2022 (incl. Sec. 1.61-21 (d) (5) (v) and the vehicle cent-per-mile rule according to Regs 1.61-21 (e).

The tariffs (except for charitable kilometers) are set as a result of an annual study by an independent contractor who analyzes the fixed and variable costs of running a motor vehicle, the communication said.

– To comment on this article or suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.


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