Herb Weisbaum: Understanding The Mileage Deduction

SEATTLE - Here's a heads up for anyone who plans to claim a deduction on their 2005 tax return for using their vehicle (car, van, pickup or panel truck) for business purposes. Unless you claim the actual expenses for operating that vehicle, such as gas, insurance, and repairs, you'll take a standard mileage deduction.

In that case, you take the number of miles you drove for business and multiply them by the IRS allowance.

This year, that's a bit more complicated. You need to know when you drove those miles, because that mileage allowance changed in August. The IRS boosted the per mile rate to compensate for higher gasoline prices.

Business miles driven from January through August 2005 are worth 40.5 cents. Miles driven from September through December of last year are worth 48.5 cents.

Again, this change does not affect you if you deduct the actual cost of using your personal vehicle for business.

The deduction for charity miles stayed the same last year 14 cents a mile, unless you used your car for volunteer work related to hurricane Katrina relief.

For more information:

Tax time: Changes for 2005

Tax returns for 2005 have new rules

Tax breaks for small businesses