ReNews -- Remodelors Council News - 01/05/2005  (Plain Text Version)

Doug Sutton, Sr. CGR, CAPS
Remodelors^TM Council Chair
Springfield, Illinois

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In this issue:
Join the RC During the Builders' Show
RC News: GE Joins Pella, Whirlpool as 2005 RC Platinum Strategic Partner
RC Awards: Wisconsin Remodeler Named January Remodelor of the Month
Business Management: Don’t Leave Your Reputation on the Table: Achieve the Zero Punch List
NAHB News: Dupont Recognizes 2004 CGR ; Get Ready for Designation Month
Industry News: IRS Increases Standard Business-Use Mileage Rate
Are You On Top of Your NAHB Member Benefits? See What's New

Industry News: IRS Increases Standard Business-Use Mileage Rate

In This Issue:

• IRS Increases Standard Business-Use Mileage Rate
• Powder Room Plus

IRS Increases Standard Business-Use Mileage Rate

If you’re like many residential construction professionals, you use a personal car, truck, or van for business use.

Some people find it easier to record the miles they drive for business and then use the Internal Revenue Service’s standard mileage rates to figure the business vehicle-usage deduction for their tax returns. Others prefer to track and tally actual business vehicle expenses like fuel, tolls, maintenance, insurance, etc, to calculate the vehicle-usage deduction. 

Here’s something you may not know: The first year a car you own is available for business use, you must use the standard mileage rate to calculate your business vehicle-usage deduction. In later years, you can use the standard mileage rate or actual vehicle expenses. If you decide to use the standard mileage rate for a car you lease, you must use it for the entire lease period.

On Nov. 17, 2004, the IRS released the optional standard mileage rates to use for 2005 in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes.

Beginning Jan. 1, 2005, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) will be:

• 40.5 cents a mile for all business miles driven, up from 37.5 cents a mile in 2004;
• 15 cents a mile when computing deductible medical or moving expenses, up from 14 cents a mile in 2004; and
• 14 cents a mile when giving services to a charitable organization.

The three-cent increase in the business mileage rate was the largest one-year rise ever. The primary reasons were higher prices for vehicles and fuel during the year ending in September 2004. The charitable standard mileage rate is set by law.
 
The standard mileage rates for business, medical, and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. An independent contractor, Runzheimer International, conducted the study for the IRS.
 
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire, or for more than four vehicles used simultaneously.
 
For more information on standard mileage rates and other tax issues, visit the IRS Web site: www.irs.gov.