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LSDefine
Simple English definitions for legal terms
standard mileage rate
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A quick definition of standard mileage rate:
Standard mileage rate is a way to save money on taxes when you use your car for business, medical, or charity purposes. It's like getting paid a certain amount of money for every mile you drive. You can either calculate the cost yourself or use the standard mileage rate set by the IRS. This makes it easier to claim a tax deduction without having to keep track of all your receipts. The rate changes depending on the reason for your travel, but it's a good way to save money on your taxes.
A more thorough explanation:
The standard mileage rate is a tax deduction offered by the IRS for individuals who travel for business, medical, or charitable purposes. It is a basic deduction per mile that an individual can claim on their tax return.
For example, if an individual travels 1,000 miles for business purposes and the standard mileage rate is 50 cents per mile, they can deduct $500 from their taxable income.
There are different standard mileage rates for different purposes. As of 2021, the rates are:
- 56 cents per mile for business purposes
- 16 cents per mile for medical purposes
- 14 cents per mile for charitable purposes
It is important to note that an individual must report the number of miles they have traveled to the IRS in order to claim the deduction. They can either use the standard mileage rate or calculate their actual costs per mile, which can be challenging and requires receipts for all gas and auto upkeep.
Overall, the standard mileage rate is a helpful tax deduction for individuals who travel for business, medical, or charitable purposes.