How does the mileage deduction work?
February 26, 2007
Date: Sun, 31 Dec 2006
I get $600 per month car allowance. How many cents per dollar does the IRS match? I thought it was around 35¢ per mile.
Date: Wed, 31 Jan 2007
The IRS doesn't "match" a car allowance. The standard mileage rate for business miles you can account for is 44.5¢ per mile for 2006 and 48.5¢ per mile for 2007.
Car allowances are non-accountable plans, includable in an employee's income and for which employment taxes are computed. The employee claims a miscellaneous itemized deduction for employee business expenses on Form 2106. Two percent of adjusted gross income is subtracted from most miscellaneous itemized deductions, and they are not deductible when computing the alternative minimum tax.
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