IRS Increases Mileage Rate to 56.5 Cents per Mile

The IRS today announced the increase of the standard mileage rates for the 2013 tax year.

The standard mileage rates are the following:

	Business	Medical Moving	Charitable
2013	56.5	24	14
July 1, 2011 - Dec. 31, 2012	55.5	23.5	14
Jan. 1, 2011 - June 30, 2011	51	19	14
2010	50	16.5	14
2009	55	24	14
July 1, 2008 - Dec. 31, 2008	58.5	27	14
Jan. 1, 2008 - June 30, 2008	50.5	19	14
2007	48.5	20	14
2006	44.5	18	14, 32*, 44.5**
September 1 - December 31, 2005	48.5	22	14, 34*, 48.5**
August 25 - 31, 2005	40.5	15	14, 29*, 40.5**
January 1 - August 24, 2005	40.5	15	14
2004	37.5	14	14

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	55.5	23.5	14
Jan. 1, 2011 - June 30, 2011	51	19	14
2010	50	16.5	14
2009	55	24	14
July 1, 2008 - Dec. 31, 2008	58.5	27	14
Jan. 1, 2008 - June 30, 2008	50.5	19	14

Deducting the cost of Work Clothes and Uniforms

Qualified uniform expenses are the cost and upkeep of uniforms and certain articles that are:

• Specifically required as a condition of employment, and
• Not adaptable to general use as regular clothing

The deduction is also allowed for "Uniforms required by your employer that are not suitable for ordinary wear" as well as "protective clothing required in your work."

This includes protective clothing such as safety shoes, boots, safety glasses, hard hats, and work gloves. Taxpayers should look into this deduction if their occupation is a carpenter, cement worker, chemical worker, electrician, fishing boat crew member, machinist, oil field worker, pipe fitter, steamfitter, or truck driver.

My employer paid moving expenses. Can I deduct them?

If you moved to a new home because you changed job locations or started a new job, you can deduct your moving expenses on Form 3903.  There are three requirements:

• Relationship test - must move within one year from the date you first report to your new location
  
• Distance test - move must decrease your commute by 50 miles or more. In other words, your new job has to more than 50 miles farther away from your hold home than the distance from your old home to the old work location.
  
• Time test - must work full time in the new location for at least 39 weeks during the 12 months after the move. If you're self-employed you must also work in the new job for 78 weeks during the 24 months following the move. (There are exceptions for disability, layoff, transfers, and other situations.)
  

If moving expenses were not reimbursed by your employer, you can deduct all allowable expenses. If moving expenses were reimbursed by the employer under a(an):

• non accountable plan, the reimbursement is included in your W-2 box 1.
• accountable plan, the reimbursement is excluded from the W-2 box 1. This amount excluded from income and is reported in box 12 of the W-2 with a code P. This amount is reported on line 4 of the Form 3903.

The easiest solution is to complete Form 3903 and if there is a deduction available it will carry over to Form 1040 line 26.

2011 Mileage Rates

Beginning on Jan. 1, 2011, the standard mileage rates are the following:

• 51 cents per mile for business miles driven (50 cents in 2010, 55 cents in 2009)
• 19 cents per mile driven for medical or moving purposes (16.5 in 2010, 24 in 2009)
• 14 cents per mile driven in service of charitable organizations (14 in both 2010 and 2009)

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.