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RANDOM WISDOM from around the tax world

by on
in Small Business Tax

IRS won't save you from high gas prices


Despite complaints from taxpayers, the IRS doesn't plan to increase its standard mileage rate this year to reflect rising gas prices, according to reports.

The 2004 rate now stands at 37.5 cents for every business mile traveled (plus tolls and parking fees). But the IRS said it will factor higher prices into the mileage rate used for 2005. So you should be able to bank on a substantially higher rate next year.

Advice: Switch to the 'actual expense' method to deduct your business driving costs. That way, you can deduct the true cost of those extra dollars at the pump. (See 4/19/04 issue.)

Don't let tax tail wag the investment dog

In the past three years, the tax code has been rewritten so much that some investors have sharply modified their portfolios to take advantage of these changes. But if done for the wrong reasons, such moves could be a mistake.

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