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2022 Mileage Rate Increase

2022 Mileage Rate Increase

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The IRS has updated the 2022 mileage reimbursement rates to account for the rising cost of gas.  Effective July 1, 2022 the new rate for business related travel increased $0.04 from $0.585 per mile to $0.625.  Driving for medical purposes may be deducted at $0.22 per mile and mileage for service to a charitable organization is unchanged at $0.14/mile. Mileage for moving expenses is no longer deductible.

You also have the option of calculating the actual costs of using your vehicle instead of using the standard mileage rate.  However, you will still need to keep a mileage log to be able to calculate what percent of your actual expenses are deductible.

Remember – miscellaneous deductions (which includes unreimbursed employee expenses and home office deductions) are no longer deductible.  Therefore, we recommend that employees get reimbursed for business mileage and other business expenses.  If, however, you file form schedule C you can still deduct the mileage and home office deductions (this applies to self-employed individuals).

If you are a minister subject to Self-employment taxes, any unreimbursed mileage can be used to reduce your self-employment taxes (but not your federal income taxes).

We are here to help if you have any questions.

tax time

Tax Season Is Here!

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The IRS increased the reimbursement mileage rate from $0.56 to $0.585 per mile in 2022. Medical mileage rates increased from $0.16 to $0.18 and charitable mileage remained the same at $0.14 per mile.

The last couple of years have been challenging if you have needed to get in touch with the Internal Revenue Service to resolve any issues.  Many are still waiting for refunds from last year, with no valid reason for a delay in processing that refund.

National Taxpayer Advocate Erin Collins warned Congress that the upcoming tax filing season will be the most challenging on record as taxpayers must navigate new tax code complexities and an overwhelmed IRS. Collin’s’ annual report to Congress details issues that will complicate the filing season. They include millions of unprocessed tax returns for previous years, increasing poor phone service and complications with pandemic relief program. IRS call volumes spiked from 100.5 million 2020 to 275 million in 2021. The IRS answered 11% of calls in 2021 vs 24.1% in 2020. Think about that….only 1 in 10 calls to the IRS get answered.  One problem cited for contributing to the IRS backlog is the number of paper returns filed.

If you need assistance, your tax preparer should be able to get through quicker on a dedicated preparer hotline…but it will still take longer than in prior years.  If we can be of assistance, please call our office.

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2020 Mileage Rates and HSA Limits

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The IRS has released the new mileage reimbursement rates for 2020.   For business related travel, the new rate is $0.575 per mile (down from $0.58 last year).  Driving for medical may be deducted at $0.17/mile (down from $0.20 in 2019) and mileage for service to a charitable organization is unchanged at $0.14/mile. Mileage for moving expenses is no longer deductible.

You also have the option of calculating the actual costs of using your vehicle instead of using the standard mileage rate.

Remember – under the new tax law, miscellaneous deductions (which includes unreimbursed employee expenses and home office deductions) are no longer deductible.  Therefore, we recommend that employees get reimbursed for business mileage and other business expenses.  If, however, you file form schedule C, you can still deduct the mileage and home office deductions.  This applies to self-employed individuals.

The 2020 HSA contribution limits increased to $3,550 for an individual and $7,100 for a family.  If you are 55 or older, you can contribute an additional $1,000.  If you have a qualifying high deductible health insurance plan, this is a great opportunity to pay for medical expenses with pre-tax dollars.  Unused funds can accumulate and be used to cover medical expenses during retirement.