It’s Fall, and that means the IRS will be issuing its annual updates for the upcoming tax season. The IRS updates the mileage rate too every Fall, and it’s possible that there may be another increase but nothing is certain until we hear directly from the source itself: the Internal Revenue Service. Last year, the mileage rate for using a vehicle for business started at $.51 per mile and then the unusual occurred: the IRS raised the rate halfway through the year. 2011 ended up with a $.555 per mile rate.
A mid-year increase in the IRS mileage rate has never happened before but may help explain why there may not be an increase for 2013. The 2013 IRS mileage rate announcement will come any day now, as businesses prepare for the tax season, starting in just a few weeks, early December. They use the rate as a benchmark for reimbursing employees who use their own vehicles for the business. Some taxpayers also use the rate rather than figuring out their actual costs of driving the vehicle.
Business use of a vehicle is reimbursed at a much higher rate than driving a vehicle for charity or for medical purposes. These IRS mileage rates are less than half the business rate. The only exception to this pattern is during 2005 and 2006. For those tax years, those who drove for charitable purposes having to do with Hurricane Katrina were reimbursed at the same rate as those who drove for business. At that time the rate was under $.50 per mile. The current rate for charitable driving is $.14 per mile. The 2013 IRS mileage rate for charitable purposes is expected to remain the same as 2011.
Driving your car to a volunteer activity puts you in a position to deduct those miles you drove from your federal taxes. Driving your car as part of the volunteer work is also grounds for taking a deduction for those miles.
The IRS mileage rate for miles driven to volunteering or as part of the volunteer work is fourteen cents per mile. This rate for the so-called charity miles has been the same for years now, even as the IRS mileage rates for business miles and moving have gone up.
Even though the government gives you a break on the miles you drive for charity, you cannot deduct the value of the actual work you do. It’s totally charity except for the tax deduction on the miles you drive.
Driving your car to a family’s home to teach life skills is an example of charity miles you can deduct. Providing clerical support to a youth organization is another example. Volunteering at a pet shelter to walk the dogs or play with the animals is another activity which may include driving to get there. If it does, then you can deduct those miles at $.14 per mile.
The IRS mileage rate comes in many forms. It’s not just the obvious scenario, which is driving your own car for company business. There are other types of driven miles you can deduct from your 2011 taxes and of course 2012 and so on.
This deduction has been around for a while and seems here to stay so this info is applicable to any tax year. In fact, the IRS mileage rate has been around for decades. The only thing that changes is the actual IRS mileage rate. Some years it goes up to reflect a hike in gasoline prices. the IRS 2011 mileage rate did just that: it went up.
Another type of deductible driving is moving miles. If you move for your job then you can deduct those miles driven. The IRS mileage rate for moving is 19 cents per mile.
There are a few more rules with the moving miles deduction. First, the move must be because of a job. You can’t just decide to move for the heck of it and have the miles deducted.
Second, the drive to that new job from your old home must be at least fifty miles greater than your old job. In other words, if your new job adds more than fifty miles of driving to your commute each way, then you might want to consider moving. The miles you drive for that move are the miles which are deductible at the IRS mileage rate of 19 cents per mile.
Third, and this goes without saying but nothing actually must go unsaid with the IRS: the new home just be closer to your new job than your old home. So, you can’t move and end up further away from that new job and expect the IRS to give you a tax break.
Last rule to qualify to deduct the IRS mileage rate for moving expenses is that you have to be working full time for at least thirty nine weeks out of the year.
You may think the IRS 2011 mileage rate doesn’t apply to you because you don’t drive your car for your company. There are a few intricacies of the tax rules that aren’t widely known, so it’s worth finding out what they are in case you can save money on your 2011 taxes. Here are a few things hardly anyone knows about the IRS mileaage rate:
If You Drive Anywhere For Medical Care, its’ Deductible
Let’s say you drive a few times a week for dialysis. Well those miles are deductible at the IRS 2011 mileage rate, which is 19 cents per mile. So if you drive round trip thirty miles twice a week, that’s 60 miles per week.
60 miles = $11.40
$11.40 x 52 weeks = $592.80
You can deduct $592.80 off your tax income and it has nothing to do with work. How may people out there are driving themselves or a dependent to medical care every week and don’t know about the IRS 2011 mileage rate? What’s nice about it also is that the IRS 201o mileage rate was only $16.5 per mile. The increase for 2011 was a pretty big jump.
On top of that, you can also deduct the tolls and parking for those trips.
The IRS mileage rate for 2012 will stay at the raised rate of 55.5 cents per mile. The business mileage rate was raised in the middle of 2011 and will stay at that elevated rate, according to the IRS.
Raising the IRS mileage rate in the middle of a tax year is unusual, but 2011′s higher gas prices prompted the IRS to bump it up a few cents. For the first half of 2011, the IRS business mileage rate was 51 cents per mile.
People who drive for a business can deduct the cost when it comes time to do taxes. If the driving was for business related activities, then the IRS mileage rate will be important in calculating those deductions.
Other IRS Mileage Rates
Other IRS mileage rates are set for medical driving and also driving for moving purposes. These rates are much lower. These IRS mileage rates actually went down by 5 cents. The business mileage rates for moving or medical purposes is now 23 cents per mile.
There is another business-related driving deduction allowed by the IRS, and that’s for charitable purposes. A business that has people doing driving related to charitable work, the IRS mileage rate is 14 cents per mile. That figure is unchanged from 2011.
If you are doing your taxes right now for the year 2011, you may be using the standard mileage rate if you operated a vehicle for business, charity, or for medical or moving purposes. Use the rate for 2011, even though it’s 2012 when you may be figuring your taxes.
The 2011 IRS mileage rate actually changed mid year:
for business miles driven January 1 to June 20, 2011 it’s $.51
for business miles driven July 1 to December 31 2011 it’s $.555
For medical or moving driving expenses the rates were:
January 1 to June 20, 2011 it’s $.23
July 1 to December 31 2011 it’s $.19
For miles driven for a charity there was no change:
January 1 to June 20, 2011 it’s $.14
July 1 to December 31 2011 it’s $.14
In fact, the 2011 IRS mileage rate for charity driving is the same as has been for many years…unchanged in relation to the standard of living increase.
Rules for 2011 IRS Mileage Rate
You can deduct the mileage if you are an independent contractor or even if you have two jobs and have to drive directly from one to the other. Bet you didn’t know that. You can’t deduct the miles you drive from home to the first job but you can deduct the miles you drive between jobs.
Deductible business miles also include miles you drive while looking for a job. Drive to an interview? Deduct it. Job fair? Drive and deduct it. The job you are seeking must be in the same field as the job you are leaving, that’s the only rule. You would use the 2011 IRS mileage rate used for business miles.