# IRS Mileage Rate



## FLKeys (Dec 27, 2018)

Think we will see a mid year adjustment to the mileage rate for 2022? If I remember correctly there were two rates in 2011. One for Jan-June and one for July-Dec.


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## FLKeys (Dec 27, 2018)

NAFCU to IRS: Adjust the 2022 optional mileage rate | NAFCU


NAFCU President and CEO Dan Berger Wednesday wrote to the Internal Revenue Service (IRS) urging the agency to adjust the 2022 standard optional mileage rate to reflect the strained oil market and rising gas prices, as well as the impacts consumers face because of inflation and the COVID-19...




www.nafcu.org


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## FLKeys (Dec 27, 2018)

Will We See a Mid-Year Increase of the 2022 Standard Mileage Rate?


The trend of gas prices right now shares similarities to past years when the IRS adjusted the standard mileage rate. Will they do it again?




companymileage.com


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## FLKeys (Dec 27, 2018)

https://finance.yahoo.com/news/democrats-urge-irs-boost-drivers-120000708.html?fr=sycsrp_catchall



Looks like there is a push to increase the mileage rate and also make it retroactive to March 1st. I'll have to keep an eye on this.


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## 25rides7daysaweek (Nov 20, 2017)

What does any of this boil down too?
These articles dont seem to give any #s


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## FLKeys (Dec 27, 2018)

25rides7daysaweek said:


> What does any of this boil down too?
> These articles dont seem to give any #s


Unfortunately the IRS comes up with the number based on their own internal figures. Don't know if they share their magic formula anywhere.


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## 25rides7daysaweek (Nov 20, 2017)

FLKeys said:


> Unfortunately the IRS comes up with the number based on their own internal figures. Don't know if they share their magic formula anywhere.


I'll be happy to take any money
they want to give me 
This past year I made enough off of miles
to pay for depreciation on the 2019 Corolla
that I'll write off again next year


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## FLKeys (Dec 27, 2018)

25rides7daysaweek said:


> I'll be happy to take any money
> they want to give me
> This past year I made enough off of miles
> to pay for depreciation on the 2019 Corolla
> that I'll write off again next year


I always wondered how that works when you dispose of an asset where you took standard mileage deductions each year. I know there is a portion for depreciation and I know you are supposed to recapture the depreciation when you dispose of the vehicle. I always mean to look into this more and never do.

@Seamus ant thoughts on this?

Breakdown of depreciation per mile for each year, lets say you drove 30,000 miles each year.

2018 - 25¢ x 30,000 = $7,500.00
2019 - 26¢ x 30,000 = $7,800.00
2020 - 27¢ x 30,000 = $8,100.00
2021 - 26¢ x 30,000 = $7,800.00
2022 - 26¢ x 30,000 = $7,800.00

So in those 5 years claiming the standard mileage deduction I received $39,000.00 in depreciation, well more than I paid for the vehicle. Lets say I paid $20,000 for the vehicle and at the end of 2022 I scrap the vehicle. Do I have to repay back the extra depreciation of $19,000.00?

Don't really know how the recapture works exactly, especially when you take the standard mileage deduction.


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## Seamus (Jun 21, 2018)

FLKeys said:


> @Seamus ant thoughts on this?


Yes, this one is complicated but once you get it you get it. Corporations and fleet businesses have been dealing with this forever on asset sales. My guess is most Independent Contractors who use the standard mileage deduction never even dealt with this before even though they should have by IRS rules. I've noticed a BIG uptick of the discussion when the gigs partnered with TurboTax. Rideshare drivers used TurboTax and hit the question of wether they sold the car or not! SURPRISE!!! And most are like WTF!!

Although it seems a little complicated it's based on a simple premise. You can't double dip on the expense. If the re capture isn't done on the sale of the asset you are double expensing it.

For a business that doesn't use standard mileage deduction it's simpler. To keep the numbers simple. It's obviously only an issue if you sell the car at a HIGHER than depreciated value.

Purchase car $12,000 straight line assuming 6 year lifespan.
In year 5 you sell it having written off $10,000 of depreciation. remaining value $2000.
You sell it for $2000 or less than no recapture.
You sell it for $3000 you have to recapture $1000 so the taxes become based on $4000 on the sale.

Just another reason why most company cars are leased instead of purchased. Companies aren't in the business of selling assets for a profit and dealing with the tax issues.

Yes, the IC use of standard mileage deduction is more confusing, but TurboTax guides you right thru it.

So far I've personally ignored it which I fully admit IS NOT the theoretically legal way. I've spent my entire adult life selling an old car from time to time and have never reported the sale on my income taxes so I'm not about to start now. On schedule C I treat it as a car taken out of service but not sold. The truth is by the time I'm done with them they are high mileage of little value so they have been "given as gifts to family members" and not sold.


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## FLKeys (Dec 27, 2018)

Seamus said:


> Yes, this one is complicated but once you get it you get it. Corporations and fleet businesses have been dealing with this forever on asset sales. My guess is most Independent Contractors who use the standard mileage deduction never even dealt with this before even though they should have by IRS rules. I've noticed a BIG uptick of the discussion when the gigs partnered with TurboTax. Rideshare drivers used TurboTax and hit the question of wether they sold the car or not! SURPRISE!!! And most are like WTF!!
> 
> Although it seems a little complicated it's based on a simple premise. You can't double dip on the expense. If the re capture isn't done on the sale of the asset you are double expensing it.
> 
> ...


What is supposed to happen when you receive more in depreciation then the vehicle is worth because you took the standard mileage for so many years? I agree drive the car until it is dead and has no value left.


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## Seamus (Jun 21, 2018)

FLKeys said:


> What is supposed to happen when you receive more in depreciation then the vehicle is worth because you took the standard mileage for so many years? I agree drive the car until it is dead and has no value left.


Nothing unless you sell it. If the depreciated value is 0 and you sell it for 5000 then 5000 would be recaptured on schedule C. Sucks. But I’d never do it, I’d Just take it out of service and gift it to a family member first. If they sold it then oh well. The car isn’t registered in a business name so traceability gets fuzzy but I will never “sell” a vehicle I depreciated for business. But once gifted and titled to a family member they might.


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## FLKeys (Dec 27, 2018)

Seamus said:


> Nothing unless you sell it. If the depreciated value is 0 and you sell it for 5000 then 5000 would be recaptured on schedule C. Sucks. But I’d never do it, I’d Just take it out of service and gift it to a family member first. If they sold it then oh well. The car isn’t registered in a business name so traceability gets fuzzy but I will never “sell” a vehicle I depreciated for business. But once gifted and titled to a family member they might.


Okay, that makes sense that you would recapture only what you sold it for if the depreciated value was $0. 
I agree with not selling it, again I drive most into the ground anyway and at most collect scrap value on them.


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## Seamus (Jun 21, 2018)

FLKeys said:


> Okay, that makes sense that you would recapture only what you sold it for if the depreciated value was $0.
> I agree with not selling it, again I drive most into the ground anyway and at most collect scrap value on them.


I'm old school when it comes to cars and admit it. I was a manufacturing engineer with GM for 12 years. My old school ways mean when I'm done with a car it's high mileage and I've gotten my money's worth and more out of it. The problem comes from my belief that if the car still runs and is in good shape keep it. At one time I had 7 cars and my house looked like a used car lot!  I have scrapped or gifted far more cars than I've ever sold.


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## Seamus (Jun 21, 2018)

FLKeys said:


> Okay, that makes sense that you would recapture only what you sold it for if the depreciated value was $0.


Yes once you get it you get it. Recaptured depreciation is only for a _sale _of the vehicle and is the difference between the depreciated value and the sale price. It's just a little more complicated equation when the car has been used for business with the Standard Mileage Deductions. 

Probably very few drivers realize the IRS considers (for 2022) that of the 58.5 cents standard mileage deduction, 26 cents of that is considered the depreciation amount. The good news is that if you use a car for rideshare for a significant number of years and miles, and you use SMD, then you're able to deduct depreciation in excess of the original value of the car you used. On the flip side, when you _sell_ that car you may have the recapture to deal with.

I would bet the house very few drivers realize the issue of recapture until they use TurboTax and sell the car they used. Then it's a WTF moment!


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