The IRS has issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Background:If you use a personal vehicle for business driving, you can generally deduct the actual expenses attributable to your business use. This includes expenses such as gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you may claim a depreciation allowance for the vehicle, based on the
|The national average price of a gallon of regular unleaded gas was $3.25 on December 29, 2011. This was down significantly from the 2011 high of $4.11 a gallon in July.
However, it is still higher than the cost in December of 2010 when a gallon of unleaded regular was $2.97.— Source: AAA Daily Fuel Gauge Report
percentage of business use. However, annual write-offs are subject to so-called “luxury car” limits, indexed annually.But some taxpayers don’t want to keep track of every last vehicle-related expense. Another option:Instead of deducting your actual expenses, you may be able to use the IRS’ standard mileage rate. With this approach, you don’t have to account for all your actual expenses, although you still must record the mileage for each business trip, the date, the destinations, the names and relationships of the business parties and the business purpose of the travel. The rate is adjusted annually by the IRS.Beginning on January 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 55.5 cents per mile for business miles driven. (This is the same rate allowed for the second half of 2011. For the first six months of 2011, the rate was 51 cents a mile.)
- 23 cents per mile driven for medical or moving purposes. (For the last six months of 2011, the per-mile amount was 23.5 cents. For the first six months of 2011, the rate was 19 cents per mile.)
- 14 cents per mile driven in service of charitable organizations. (This amount remains unchanged from 2011.)
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study, which was conducted by Runzheimer International.Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.If you have questions about deducting mileage expenses in your situation, consult with your tax adviser.