Drivers who deduct mileage on their tax returns, rejoice! The Internal Revenue Service has increased the optional standard deduction amounts by 4.5 cents per mile.
These are the rates that are available for business travel, as well as trips for medical treatments and moving. When you have qualified expenses -- that is, costs approved by the Internal Revenue Service -- in these areas, you can deduct the mileage.
You have two choices on how to claim the travel tax break.
You can either track all your costs of operating your vehicle and deduct those.
Or you can simply keep track of relevant tax-deductible miles and multiply them by the standard rate. Most folks tend to use this method.
A couple of months ago when gasoline prices were going up each week, there was a collective taxpayer cry for mileage rate increases. The IRS, which adjusts the rates each fall, balked at first.
Tax officials said gas prices might go down and that a midyear adjustment, which the agency made in 2008 when pump prices were nudging the $4-per-gallon mark, is confusing and poses problems for businesses.
Both of those excuses reasons are still true today, but the IRS decided to hike the rates anyway. Go figure.
So beginning July 1, you'll get more tax deduction mileage for your IRS-approved travel. Here's how the 2011 per-mile rates shake out:
|Miles driven between||Business||Medical||Moving|
|Jan. 1 and June 30||51 cents||19 cents||19 cents|
|July 1 and Dec. 31||55.5 cents||23.5 cents||23.5 cents|
Conscientious Schedule A filers will notice that the table doesn't include the mileage you can write off as a charitable deduction for miles traveled in service to an authorized nonprofit.
That's because the IRS doesn't have any leeway in changing the charity mileage rate. That's 14 cents per mile and it's set by Congress. Only your lawmakers in Washington, D.C., can make that change and they haven't. So it's still 14 cents through the end of 2011.
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