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The IRS released the 2016 standard mileage rates for business, medical and moving in December. The rates have decreased from 2015, probably due to the decrease in the cost of gasoline.  Effective January 1, 2016, the standard mileage rates for the use of an automobile are as follows:

54 cents per mile for business miles driven

19 cents per mile driven for medical or moving purposes

14 cents per mile driven for charitable organizations

Actual or standard mileage rate?

Taxpayers have the option of using their actual expenses incurred for the use of their automobile. However, that does not mean that you can avoid keeping a mileage log.  You have to know the percentage of business use and personal use in order to properly substantiate the actual expenses you claim as business use.

Audit signal?

I attended a seminar this month and the instructor told us that anyone who claims their automobile is 100% business use is set up for an audit by the IRS. Best practice is to log your miles, giving details of where you drove and the business purpose.  For me, I use a small spiral notebook that I keep in my car.  I record where I’m going and the beginning and ending miles.  I also keep my oil change records to further substantiate my mileage.  Upon an audit, I can produce both, and the IRS can compare my mileage on a particular date to my oil change records.