Jay Benhamo sends a photo of gas prices to his friends while pumping gas at an ExxonMobil gas station on June 9, 2022 in Houston.
Brandon Bell | Getty Images
If you’re self-employed or own a small business, you may soon qualify for a little relief from high gas prices.
Starting July 1, the standard mileage rate — used to deduct eligible business trips in a car on tax returns — increased by 4 cents to 62.5 cents per mile, According to the IRS. The new price will apply to flights during the second half of 2022.
The rate for active-duty medical or military transportation will also increase by 4 cents, allowing eligible applicants to claim 22 cents per mile. But the rate for charitable organizations was unchanged at 14 cents.
More personal finance:
401(k) Savers Will Get A “Wake Up Call” In Their Next Statement
The last chance for some tax officials to avoid late penalties is June 15
Epidemiological stimulus assays were a major experiment. Did you succeed?
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” IRS Commissioner Chuck Rettig said in a statement.
The change comes as gas prices continue to rise to record levels, Swelling to over $5 a gallon nationwidedue to increased demand and shortages caused in part by the war in Ukraine.
annual inflation By 8.6% in MayIt’s the highest increase since December 1981, according to the US Bureau of Labor Statistics, as higher fuel costs contributed most to the gains.
“It is unusual for the IRS to have a mid-year change in the standard mileage rate,” said certified financial planner Tricia Rosen, director of Access Financial Planning in Andover, Massachusetts.
She explained that there had only been a semi-annual shift three times since 2008, the last of which was in 2011. Each one occurred after gas prices went up, she said.
Rosen said that while it’s always important to keep track of miles, including travel dates, it will be even more important in 2022 to make sure the correct fares are applied to every flight.
The standard mileage rate is not mandatory, according to the IRS. Taxpayers also have the option of calculating actual costs, which involves deducting a percentage of total vehicle expenses. But either way, you will need to keep detailed records.
“The IRS wants to see a record of business, medical, and personal miles to prove that you are entitled to the deduction,” said Lorette Dearden, CFP and CPA at her namesake company in Laurel, Maryland.
You will need to show the starting and ending distance traveled, the business or medical purpose of the trip and the date in your record. But realistically, very few people keep these kinds of records, she said.
However, you can use mobile apps to automatically track mileage, which could make it easier in tax time, she suggests.
. “Proud travel guru. Friend of animals everywhere. Zombie ninja. Explorer. Troublemaker. Wannabe analyst. Bacon junkie.”