Saturday, February 23, 2013

Standard Rates Are Much Easier to Use



Standard Rates Are Much Easier to Use

When you figure your deduction for automobile mileage and out-of-town business meals, the IRS will let you use EITHER your actual expenses, substantiated by receipts, OR a standard rate. In both cases, the standard rates are much easier to use, and I think it's usually to your financial advantage, as well.

For vehicle expenses, you can add up all your costs for gas, oil, repairs, insurance, registration, and depreciation, or you can use the standard rate for 2012 of 55½ cents a mile. Using actual cost may be to your advantage the first year you own the car, because of the depreciation, but there’s a catch: if you use actual cost the first year, you have to use actual cost every year you own the car. With an older car, the standard mileage method almost always exceeds your actual cost. Again, the mileage method is a lot easier, and it takes into account a reasonable average cost to operate and maintain your vehicle.

For meals, you can also use your actual cost for meals when you travel out of town, or use the standard per diem meal allowance rates which have been established for every city in the country. For 2012, the standard nationwide rate for meals and incidental expenses is $46.00 a day, but most larger cities have rates higher than that, ranging to $71.00 and above. Like vehicle expenses, the standard rates are easier to use, you don't need receipts, and they will probably exceed your actual costs in most cases.

Chapter Eight of The Actor’s Tax Guide discusses these expenses in detail.  Get it at www.ActorsTaxGuide.com.

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