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Having a loved one with special needs often means frequent car trips – whether to physical therapy, occupational therapy, doctor visits, or elsewhere. Parents and caretakers of disabled children and adults are able to use the Internal Revenue Service’s (IRS) optional standard mileage rates to calculate the deductible costs of operating a vehicle for many of these trips.

deductions for special needsIn December, the IRS issued their 2017 optional standard mileage rates. Beginning on January 1, the rates for the use of a car, van, pickup truck or panel truck will be as follows:

  • 53.5 cents per mile for business miles driven
  • 17 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

This coming year, the standard mileage rate for business miles is down by half a cent per mile — the rate was 54 cents in 2016. The rate for business miles is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes, which is calculated based on the variable costs, is down from 19 cents in 2016. The charitable rate is set by statute and remains unchanged.

Taxpayers have the option of calculating the actual costs of using their own vehicle instead of using the standard mileage rates. The business standard mileage rate cannot be used for more than four vehicles used simultaneously, and taxpayers may not use the business standard mileage rate for vehicles after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Notice 2016-79, which covers these new rates, was posted on December 13, 2016 on IRS.gov. The notice contains:

  • The standard mileage rates,
  • The amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and
  • The maximum standard automobile cost a taxpayer may use in computing the allowance under a fixed and variable rate plan.

It’s important for loved ones of people with special needs to know what is available to them by way of deductions, needs-based benefits and financial plans. Feel free to contact the experts at Milestone Consulting if you have any questions.

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