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Learn How Much You Can Deduct for Business Miles in 2008

The almighty tax deduction holds a special place in the heart of every taxpayer. After all, how else can you reduce the amount of tax you owe? Well, some of these deductions change each year, which means you need to stay on top of them.

The mileage deduction is the most popular modified deduction. Each year it increases or decreases depending on oil prices and such. Given the gas prices this year, you can probably guess which direction the deduction is headed for 2008.

If you've done your takes for a while, you problaby know the mileage deduction as the "business" mileage deduction. While this is the most common appliction of the deduction, two other variations can also be claimed by taxpayers.

The first variation is mileage incurred for medical or moving purposes. Arguable, those are two different subjects, but who is going to argue with the IRS. The third variation is a deduction for mileage incurred in the service of a charity.

The IRS sets the deduction amounts each year based on the projected figures for the next fiscal year. It has just released the 2008 figures and the good news is the deduction amount for business miles has gone up.

For the first time ever, the rate for calculating the business mileage deduction has topped 50 cents. It is now 50.5. If you drive 1,000 miles on business in 2008, you can claim a deduction of $505, which isn't to bad at all.

The rates applicable to the other mileage deductions in 2008 are less positive. The charitable mileage rate is unchanged and remains at 19 cents. The moving and medical expense rate actually drops from 20 cents in 2007 to 19 in 2008.

Since we are talking about taxes, nothing could be so simple as the above. There are relatively easy tests that have to be passed before you can claim each deduction above. Make absolutely sure you comply with them.

By: Aazdak Alisimo

Aazdak Alisimo writes about taxes for BusinessTaxRecovery.com.

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