IRS Announces Mileage Rate Increase for Deduction of Auto Expenses
Posted by Michael Beauchemin on Mon, Jun 27, 2011 @ 03:40 PM
Business owners, sales people and employees who have to use their automobiles for business, received good news last week when the IRS announced that the mileage rates for the second six months of 2011 (July 1- December 31, 2011) will increase from 51 cents per mile to 55.5 cents per gallon. A 4.5 cent per mile increase.
Typically, gas mileage rates are increased once per year (usually at the beginning of the year), but as a result of increased gas prices at the pump, the IRS made this adjustment mid-year. “This year’s increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman. “We are taking this step so the reimbursement rate will be fair to taxpayers.”
The table below list the mileage rates for the first six months of 2011 and the new mileage rates.
Purpose Rates 1/1/2011 – 6/30/2011 Rates 7/1/2011 – 12/31/2011 Business 51 55.5 Medical/Moving 19 23.5 Charitable 14 14
For those that use their vehicle for business purposes, the individual has a choice of deducting actual costs of using the vehicle for business purposes or deducting business mileage.
To use the actual cost for the vehicle, you will have to maintain all receipts and records related to business use for the vehicle and then total up the cost.
Keeping track of mileage is much simpler, you only have to keep a mileage log and record the business mileage usage of the vehicle. The mileage log for the vehicle becomes your business usage record and should be kept with your tax return and all other related financial receipts and records. A mileage log can just be an inexpensive notebook recording the date, where you are going, the purpose of the trip and the mileage.