IRS INCREASES BUSINESS STANDARD MILEAGE RATE

Posted 07/13/2011

General, taxpayers can use their actual expenses when calculating the deductible cost of operating an automobile for business, medical, moving expense, or charitable purposes, or they can utilize an optional standard mileage rate set by the IRS.

The IRS has recently revised the optionaal standard mileage rates used for computing the tax deduction for operating an automobile for business, medical, or employment-related moving expense purposes.

The optional rates can also be used in determining whether reimbursed business auto expenses are substantiated for income exclusion purposes. The new rates are applicable for July 1, 2011, though December 31, 2011. The change reflects recent increases in fuel prices.

The revised standard mileage rates are as follows:

• Business use of an automobile: 55.5 cents, up from 51 cents per mile
• Medical and moving expenses: 23.5 cents, up from 19 cents per mile

The charitable contribution deduction for the mileage applicable to charitable travel remains at 14 cents per mile.

Fees paid for related parking and tolls are deductible separately no matter which method is used.

We're ready to help you with any questions that you may have about the tax treatment of automobile expenses or any other tax issues you may have.

Contact us today for an appointment.

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To ensure compliance with requirements imposed by the U.S. Department of the Treasury and the IRS, we inform you that any federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or (ii) promoting, marketing, or recommending to another person any transaction or matter addressed herein.