This article, "A Guide to IRS Mileage Rates for 2022 Taxes," originally appeared on AccountingWeb.com.
Internal Revenue Commissioner Charles Rettig announced on June 9th that there’ll be increases in the agency’s mileage rates for 2022 taxes, a decision that coincided with members of Congress surmounting partisan differences and clamoring for increases.
The changes are just for the final 6 months of 2022. There aren’t any for the first 6 months.
First off, for freelancers and other self-employed individuals who use Form 1040’s Schedule C to claim center-per-mile (c.p.m) deductions for business driving, 2022’s c.p.m. rate is 62.5 for the final 6 months of 2022 and 58.5 for the first 6 months of 2022.
IRS rate adjustments aren’t unprecedented. The agency did so (Jan-Jun and Jul-Dec) for 2008 and 2011.
Those two rates for 2022 are up from: 2021’s 56; 2020’s 57.5; 2019’s 58; 2018’s 54.5; 2017’s 53.5; and 2016’s 54.4
The IRS doesn’t narrowly define “cars.” The term includes vans, pickups or panel trucks.
Schedule C’s 2022 rates of 62.5 and 58.5 are also the rate for Schedule E (owners of rental properties and Schedule F (farmers).
Medical-related driving. 2022’s c.p.m. is 22 for the final 6 months of 2022 and 18 for the first 6 months of 2022, just the same as for Armed Forces members, discussed below. Those two rates are up from 2021’s 16. Who’s entitled to deduct medical driving? Only individuals who forego their standard deduction amounts and decide to use Schedule A to itemize their outlays can claim medical expenses.
Other stipulations for itemizers: Their payments are for uninsured medical expenses; those payments are sizable.
The big hurdle: Their outlays are allowable only to the extent that they exceed a nondeductible threshold. For 2022, the unchanged threshold is 7.5 percent of adjusted gross income.
Charitable driving. As is true of medical driving, nonitemizers can’t claim charitable driving. 2022’s c.p.m. rate for the entire year is a chintzy 14, set permanently by statute. (Internal Revenue Code Section 170.) Proposals to boost it to the rate for medical driving never get anywhere.
Moving expenses for Armed Forces members. 2022’s c.p.m. is 22 for the final 6 months of 2022 and 18 for the first 6 months of 2022, just the same as for medical driving, discussed above. Those two rates are up from 2021’s 16.
In 2017’s closing days, Congress passed and then-president Trump signed what’s popularly known as the Tax Cuts and Jobs Act. Although the wide-ranging legislation includes a provision that suspends the deduction for job-related moving expenses for the years 2018 through 2025, it carves out a limited exception for members of the Armed Forces on active duty who move pursuant to a military order and incident to a change of station.
Some long-standing IRS restrictions on business and medical driving. Tolls and fees that people pay to park their cars at their place of work aren’t deductible as business driving. They’re nondeductible personal expenses. Nor will the IRS make an exception when pandemic-inspired fears cause commuters to shun public transportation.
It’s also verboten for commuters to convert the cost of travel between home and work from nondeductible commuting to deductible medical travel merely because illnesses, disabilities, or COVID-19 concerns rule out their use of public transportation.
IRS examinations. Here’s what usually happens when write-offs for car expenses are questioned by examiners. They’re untroubled by c.p.m. write-offs, as long as taxpayers are able to substantiate their miles driven.
It’s prudent for taxpayers who anticipate audits to keep glove-compartment diaries or other records in which they list the details of when, how far and why they went, along with their outlay for parking and tolls.
Many taxpayers whose returns were targeted for audit found out the expensive way that IRS auditors were understandably dismissive of individuals who submitted diaries prepared after being notified that their driving write-offs were going to be scrutinized. An especially egregious ploy: the use of a 2022 diary to record earlier-year trips.