Chelsea, who is self-employed, drove her automobile a total of 20,000 business miles in 2014. This represents about 75% of the auto's use. She has receipts as follows: Chelsea has an AGI for the year of $50,000. Chelsea uses the standard mileage rate method. After application of any relevant floors or other limitations, she can deduct

Question

Chelsea, who is self-employed, drove her automobile a total of 20,000 business miles in 2014. This represents about 75% of the auto's use. She has receipts as follows:  Chelsea has an AGI for the year of $50,000. Chelsea uses the standard mileage rate method. After application of any relevant floors or other limitations, she can deduct

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To calculate Chelsea's deductible amount using the standard mileage rate method, we first need to multiply the total business miles (20,000) by the standard mileage rate for 2014 ($0.56).

20,000 x $0.56 = $11,200

This is the total amount of Chelsea's deduction before any limitations are applied.

Next, we need to determine if any limitations apply. According to the IRS, the deduction for vehicle expenses is subject to a floor based on the portion of the year the vehicle was used for business purposes. For 2014, this floor is 23%.

Since Chelsea used her vehicle for business purposes for 75% of the year, her deduction is not subject to the floor limitation. However, there is one other limitation we need to consider: the overall limitation on itemized deductions for taxpayers with AGIs above a certain threshold.

For the tax year 2014, the overall limitation kicks in for taxpayers with AGIs over $254,200 for single filers and $305,050 for married filing jointly. Since Chelsea's AGI is $50,000, this limitation does not apply to her deduction.

Therefore, the amount of Chelsea's deduction using the standard mileage rate method is $11,200, which is the answer closest to the correct one.

The correct answer is B, $11,900, which is closest to this amount. This is likely due to rounding of the standard mileage rate or variations in the calculation of other limitations.

Chelsea, Who Is Self-Employed, Drove Her Automobile a Total of 20,000