More Tax Changes - Let's Talk Mileage

Through the last tax season, I often wrote about how it was not yet time to go through the weeds on just how the Tax Cuts and Jobs Act would affect your tax return. There were just too many variables involved that it didn’t feel the time to get deep into it while we were still doing final returns under the old rules. Now, though, things are starting to flesh themselves a bit more, so we can get a little deeper.

In one of those tax news bits that those who use it keep an eye out for, the IRS has issued mileage rates for 2018. This starts at a 54.5 cent rate per mile traveled for business, a one-cent increase over the previous year. Now that’s clearly not huge, but nice for those who do use mileage on their taxes.

One also has to realize, though, that there are going to be fewer people using mileage on their taxes this coming year. The TCJA also suspended the miscellaneous itemized deduction for those who claimed expenses that their employer did not reimburse, and that could include an amount of mileage for some workers. 

Even there, however, there are exceptions being made for reserve components of the armed forces, certain state and local government officials, and also some performance artists. They will still be allowed to use this business standard mileage rate.

There is not much more to say about that, but I did think that the news offered a chance for me to highlight the fact that it’s not only the business use of a vehicle comes with a mileage rate. There is also an 18-cent-per-mile rate for medical purposes (another one-cent bump up) and a 14-cent-per-mile rate for miles driven for charitable organization (but that is set by statute and remains unchanged).

Now granted, these are deductions that not as many will be using with the increased standard deduction. Over the years, though, I have found many people who come to me for tax help might know about deducting medical expenses and charitable donations, but they are not always that there can be the mileage deductions taken along with those. So consider this a reminder, or maybe even a light-bulb moment, for those who will still be tracking those numbers.

Another vehicle-related note, the TCJA also suspended the deduction for moving expenses for tax years beginning after December 31, 2017 until January 1, 2026. However, this does not apply to active-duty armed forces members who had to move because of an order that changed their station.

One thing you may notice about all these updates and changes is that there are few places where the alterations are so universal that it is easy to predict how it will affect tax returns on a whole. Even when a deduction changes, there is also the issue of whether or not you will even be able to take advantage of it anymore. So if you are in a position where you think any of these changes are going to affect you, or you just want to know if they will affect you, please let us know and let’s set up a planning session.

~Nicole