 IRS releases frequently asked questions about clean vehicle credits for new previously owned and commercial clean vehicles. Treasury IRS issue guidance on their intent to publish regulations regarding clean vehicles. Treasury IRS issue guidance on the incremental cost for the commercial clean vehicle credit and IRS issue standard mileage rates for 2023, business use increases 3 cents per mile. And note that some of these items have to do once again with the inflation reduction act of 2022, which clearly indicates in the title that it has something to do with reducing inflation. So you have to ask the question, do you not? How is it that this kind of like global warming stuff has anything to do with inflation reduction? And the only theory that I've come up with is that the government has confused like inflation reduction with carbon reduction. And someone needs to tell them inflation has to do with too many dollars chasing too few goods and services. Well carbon is like a gas in the air and gases and dollars are not the same thing. And you know you can see how politicians get this confused. That's why you have to tell them because obviously politicians make their money by standing in public and blowing stinky deceptive mind fogging gas at people. Politicians taking gaslighting to its literal extreme. But the fact is reducing carbon will not reduce inflation. You know what you need to do to reduce inflation is stop spending money. I mean I swear like dealing with the governments like trying to tell a gold digger to stop buying emerald earrings for a few months for crying out loud. And they're like yeah but it's okay because I paid extra to buy the emeralds that were cut in a way that produced no carbon emissions. And it's like that that means you spent more money. That's worse not bad. We're trying to lower spending at the moment not carbon for crying out. I mean I swear if you if you want a lower carbon just don't buy the dang thing in the first place for goodness like just stop flying your private jet to the energy efficient emerald jewelry shop that's located in the freaking Bahamas and the world will be spared a lot of carbon. I mean honestly I swear they do this on purpose just to drive me crazy but whatever. I are 2022-234 December 29 2022 Washington. The internal revenue service today issue the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business charitable medical or moving purposes. So for example if you have a sole proprietorship and you use your automobile for business you have a question as to whether you're going to be using the standard mileage rates or the actual deductions which can be a little bit confusing you might run into questions for example in terms of which would be a better option in terms of your tax benefits and you want to think about that from the current year that you're in as well as what you want to be doing you know basically going from that point forward. Also note you would think that whenever you're talking about you know mileage and how much it costs for driving you would have one rate whether it be applicable to different areas within the code like business charitable medical or moving but that's not the case because they put those laws in separately so they've got different kind of rates in different ways that those rates are going to be impacted or increased with or decreased with inflation are you know increased with inflation typically. So note that sometimes when they put the law in place they're going to put in a provision saying that it's going to be increased you know basically with cost of living based on inflation. It's going to be some automatic provision within the law to increase it. Other times they can't do that because people may be thinking it's a temporary thing so they just put a set amount in and it's kind of funny when that happens over time because after a while it starts to look like that dollar amount is so low it's like in material at some point in time and that's just because they didn't have it increased with inflation and they never removed it so now it's just like this vestige it's like it's like an animal that has a has a tail that's not really a tail anymore right it's just it's been it's just still kind of there it doesn't really do anything at this purpose but here we go. So beginning on January 1st 2023 the standard mileage rates for the use of a car also vans pickups and panel trucks will be 65.5 cents per mile driven for business use up 3 cents from the mid-year increase increase setting the rate for the second half of 2022 22 cents per mile driven for medical or moving purposes for qualified active duty members of the armed forces consistent with the increased mid-year rate set for the second half of 2022 14 cents per mile driven in service of charitable organizations the rate is set the rate is set by statute and remains unchanged so you can see that different the differences here in the rates and how they're applying to them that last one is starting to look quite low if you're trying to accurately think about what what the mileage would be and that's because again it's set by statute so you don't have that increasing component so these rates apply to electric and hybrid electric automobiles also will as well as gasoline and diesel powered vehicles the standard mileage rates for business use is based on an annual study of the fixed and variable costs of operating automobile so obviously if you were to come up with these rates how would you do that you would try to you would try to think about you know that the behavior of the costs breaking them out between the fixed costs of operating the vehicle and the variable costs which will change as you drive more which will allow you to kind of hopefully come up with a with a rate that's how they're going to generally do it you would think so the rate for for medical and moving purposes is based on the variable costs so in that case they're looking just at the variable components of it the ones that change with relation to an increase in the driving so it is important to note that under the tax cuts and job act taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses taxpayers also cannot claim a deduction for moving expenses unless they are members of the armed forces on active duty moving under orders to permanent change of station so there's big changes a few a couple years ago now a few years ago now I guess when they when they kind of tried to reduce the amount of of complexity and the code in part by making the itemized deductions less applicable to less people by increasing the standard deduction for one and then removing some of the items that that might be in there and they also dealt with some other deductions above the line deductions and what not like moving expenses so you can see how the tax code kind of it's like a it's like a breathing lung or something it expands and then at some point you know there's an there's a tendency to cut it back down because it's gotten quite complicated you would think that the more complications in the law oftentimes are going to be benefiting more wealthy individual individuals because complexity and the code means that you need to have you know usually the resources to be able to to take advantage of it cash flow typically and to be able to pay someone to kind of deal with it and usually some of these things have to do with cash flow so charitable deductions and whatnot and how much you put into an IRA have to do with whether or not you have the cash flow to do that so simplification I would think typically will benefit you know most tax the majority of taxpayers but in any case for more details you could see moving expenses and members of the armed forces there's a link to that here taxpayers always have the option of calculating actual costs of using their vehicle rather than using the standard mileage rate so you could when you're if you have a business use of an automobile it gets a little confusing because when you're actually doing your bookkeeping if you're in QuickBooks or something and you're you're calculating the gas that you spent you're going to have an account called automobile or gas or whatnot and the question is well do I do I take those actual amounts or do I take the standard amount and that that could be a tough question you also could have depreciation on the car versus the ease of not depreciating on the car and then you have the question going into the future if you take if you take one of the other can you change can you change your options on the same vehicle going into the future so you gotta those are things you want to keep in mind because what the IRS is going to be skeptical of is that you take the the actual deduction in year one and you take a big right off of like depreciation on the car and so you write off this huge amount in year one and then in year two you switch to the mileage method after you got that big deduction in year one they try to limit that kind of thing with some some rules and regulations so that's what you want to think about not just the current year you're in but you know future years in terms of your total tax savings so taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business so that's kind of why right because because again if you if that's the first years when you might say hey look if I use if I don't use the standard and I use the actual mileage then oftentimes they have these accelerated depreciations in that year like a 179 and other bonus depreciation allowing you a bigger deduction in that year so if you could take the big deduction in year one and then switch to the standard mileage then you might kind of game the system in that way so that's what they're kind of trying to limit so then in later years they can choose either the standard mileage or rate or actual expenses so after that point in time you don't have that same 179 big you know depreciation deduction so it would make sense then then in later years they can choose either the standard mileage or actual expenses so leased vehicles must use the standard mileage rate method for the entire lease period including renewals if the standard mileage rate is chosen so you got notice 2023-03 there's a link to that here contains the optional 2023 standard mileage rates so there's a link to that as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate Favr plan in addition the notice provides the maximum fair market value of employer provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet average valuation rule in or the vehicles since per mile valuation rule okay so there's a link to those items here there'll be a link to this in the description