Tax Tips

Tax Tips are provided by
Wood, Johnson, Heath, P.C.
8200 North Mopac, Suite 110, Austin, Texas 78759
Tel: 512-343-8075 - E-mail: info@wjh-cpa.com - Web: www.wjh-cpa.com
Certified Public Accountants, Financial Advisors, Management Consultants, Outsourced Service Provider

NOTE: The information in these tips is not intended to constitute legal, accounting, tax, investment, consulting, or other professional advice or services. For specific information that applies to your circumstances you should consult a qualified professional advisor.

April 2007
2007 PLANNING - STANDARD MILEAGE RATES FOR INDIVIDUALS

You may be wondering what you can do now to minimize your current year tax liability. If you incur costs in operating an automobile for business, charitable, medical, or moving purposes, you may be able to minimize your tax liability by claiming a deduction for the use of your automobile. If you have qualifying automobile expenses and if you opt to use the standard mileage rate in lieu of deducting actual expenses, you will want to make sure that you are using the correct standard mileage rates.

The standard mileage rates are based on an annual study of the fixed and variable costs of operating an automobile. Beginning January 1, 2006, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) are:

• 44.5 cents per mile per mile for all business miles driven;
• 18 cents per mile for all miles driven for medical or moving purposes; and
• 14 cents per mile for all miles driven for charitable purposes.

Beginning January 1, 2007, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) are:

• 48.5 cents per mile per mile for all business miles driven;
• 20 cents per mile for all miles driven for medical or moving purposes; and
• 14 cents per mile for all miles driven for charitable purposes.

Special rules apply to miles driven for charitable purposes related to Hurricane Katrina. For 2006, the rate for miles driven for charities providing Hurricane Katrina relief will be 32 cents per mile for deduction purposes and 44.5 cents per mile for reimbursement purposes. For the period August 25 to August 31, 2005, this was 29 cents for deduction purposes, and 40.5 cents for reimbursement purposes. For the months of September through December 2005, the special Katrina-related rates are 34 cents for deductions and 48.5 cents for reimbursements.

You may also be able to deduct parking fees, tolls, interest, and state and local taxes (other than gasoline taxes). Even though you are not required to substantiate expense amounts, you must substantiate other elements of time, place, and business purpose of the travel.

If you have any questions as to how these rules apply to your particular situation, please do not hesitate to call the Certified Public Accountants at Wood, Johnson, Heath, P.C. at 512-343-8075.