2016 IRS Tax Deductions for the Self-Employed

We can always spend a lot of time talking about self-directed 401(k) plans.  It doesn’t matter if  we define it as a one-participant 401(k) plan, a Uni-K, an Individual 401(k), Solo-K, self-directed 401(k), self-administered 401(k)….or any other moniker.  All are acceptable to describe a 401(k) plan for the self-employed individual with no employees.

But since many of us are self-employed, sometimes it is good to get IRS updates on some tax-related issues that may affect us.  Recently, the IRS came out with a notice for acceptable mileage rates one can use in determining the deductible costs afforded to a taxpayer when operating an automobile for their business.  This notice also includes such costs for charitable, medical or moving expenses….in case that applies to you.

Standard Mileage Rates for 2016

The IRS has issued a mileage rate for transportation or business travel expenses of 54 cents per mile for all miles of actual business use.  In addition, for the taxpayer who uses their automobile for business purposes, the portion of the standard mileage rate treated as depreciation is 24 cents for 2016 (and for those still interested in 2015 it is 24 cents as well).  And, if you are wondering what the annual maximum limits are, automobiles are limited to $28,000 with trucks and vans having a $31,000 maximum.

Taxes, taxes and taxes….how fun.  But hopefully this information may be of benefit to you in the conduct of your 2016 self-employed business….assuming you use a car for your business!

As always, the information provided is intended to be educational in nature.  It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice.  You must always consult with your respective professional in all such matters.