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2014 Updates to Business Travel Amount Deductions

The IRS’ standard mileage rate for 2014 is changing only slightly, but decreasing to 56₵ per mile from 56.5₵. To qualify for the mileage rate deduction, business travelers must keep adequate logs or diaries. If companies reimburse employees less than the IRS standard, then the employee is eligible for a business deduction for the difference in the IRS standard and the amount reimbursed. However, if reimbursed at a rate higher than the IRS standard, the excess amount is subject to withholding tax and must be reported as income on the employee’s Form W-2.

Charitable mileage rate remains the same as in 2013, at 14₵ per mile. Medical and moving mileage rates reduce to 23.5 from 24₵.

Deductible Per Diem Rates Effective October 1, 2014

Business travelers are best served by keeping accurate records for allowable expenses while away from home. In lieu of keeping actual expenses is the per diem rate to substantiate expenses for lodging, meals and incidental expenses. Below are the three categories of per diem rates, and the allowable amount for each, beginning October 1, 2014 through 2015.

  • Transportation industry rate: $59 for travel in the continental U.S., and $65 for travel outside the continental U.S.
  • Incidental expenses only: $5 per day whether inside or outside the continental U.S.
  • High cost/low cost localities: Total per diem amount for a high cost locality is $259, of which $65 is for meals. For a low cost locality, the amount is $172 per day of which $52 for meals. (Use the $65 and $52 amounts if using the meal and incidental expenses only substantiation method.)

If you have any questions about tax deductions or need help with your 2014 tax return, contact Jeff Bergman, CPA at Salmon Sims Thomas & Associates.