The Internal Revenue Service released on Friday the optional standard mileage rates that business taxpayers can use in 2012 to figure the deductible costs of operating a vehicle for business, charitable, medical or moving purposes, and for the most part they have not changed a great deal.
The standard mileage rates for using a car, van, pickup or panel truck, starting on January 1, will be 55.5 cents per mile for business miles driven, 23 cents per mile driven for medical or moving purposes, or 14 cents per mile driven in service of charitable organizations.
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
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 determined by the same study. An independent contractor, Runzheimer International, conducted the study on behalf of the IRS.
Taxpayers also 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, 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.
Rev. Proc. 2010-51 outlines these and other requirements for using a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense.
Notice 2012-01 describes the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
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