Thursday, June 23, 2011

IRS Increases Mileage Rate to 55.5 Cents per Mile

The IRS today announced the increase of the standard mileage rates for the last six months of 2011 due to the increase in gasoline prices - action similar to 2008, the last time gasoline reached $4 per gallon.

The standard mileage rates are the following:

Business    Medical/Moving    Charitable
July 1, 2011 -
Dec. 31, 2011

Jan. 1, 2011 -
June 30, 2011

July 1, 2008 -
Dec. 31, 2008

Jan. 1, 2008 -
June 30, 2008


To calculate use of personal vehicle for tax purposes, you can use one of two methods: standard mileage rate or actual expenses. If you qualify for both, calculate the deduction under both methods to see which gives you a larger deduction.

Actual expenses consist of the following costs:
  • Depreciation
  • Lease payments
  • Tires
  • Insurance
  • Registration fees
  • Garage rent
  • Parking fees
  • Licenses
  • Tags
  • Repairs
  • Gas and oil
The car expenses can also include parking fees and tolls under either method. Note: this does not include commuting expenses, these are never deductible.

Once you elect to claim actual expenses when you first begin using the car for business you cannot change to the standard rate deduction later.

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