IRS INCREASES BUSINESS STANDARD MILEAGE RATE

Generally, 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 optional 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 from July 1, 2011, through 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.