Attention tax deducting drivers. The IRS has tweaked the amount you can claim for miles traveled via car for business, charitable, medical or moving purposes.
It's the annual inflation adjustment to the optional standard mileage rates. But because of high gasoline prices this past summer, the IRS recalculated the per mile rates and made midyear changes effective July 1.
That's the main reason that there's not much shift in the 2012 rates.
The rate claimed by most taxpayers is the one allowed for business related travel. Next year, that will stay at 55.5 cents per mile, the same level to which the IRS hiked the per mile rate for July through December of 2011.
But the amount allowed for medical trips or moving costs dropped a bit. It's 23 cents per mile, a half cent less than the per mile deduction for those types of driving between July 1 and Dec. 31.
And because of that reduction, that mileage rate wins this week's By the Numbers honor.
Why the rates differ: It's not that unusual for one of the mileage rates to change, either up or down, while the others don't.
That's because the IRS, using the data gathered for it by an independent contractor, takes more than just pump prices into account when it makes any adjustments to the mileage rates.
Different calculation methods are used for the business and medical/moving rates.
The standard mileage rate for business is based on the annual study's finding of the fixed and variable costs of operating an automobile. The biggest fixed cost is the price of the vehicle.
And the rate for medical and moving purposes is based just on the variable costs as determined by the same study. The biggest variable cost is gasoline.
A low flat rate remains: And what about the miles you drive helping out your favorite charity? That's the same minuscule amount as always, 14 cents per mile, because it's set by statute and is not affected by the IRS' annual analysis of deduction amounts.
Since you can't write off the time you spend volunteering, you should at least be able to get a deductible driving rate that more realistic.
Be sure to let your Senators and Representative know how unfair it is that the charitable driving rate can't be adjusted as conditions change.
Other options: Remember that you always have the choice of tracking your actual automotive costs and writing off those instead.
These include maintenance and repairs, tires, the cost of gas, oil, insurance, depreciation or lease payments and license and registration fees.
If you use the vehicle for both personal and business driving, you must differentiate and count only the work related expenses.
But regardless of whether you choose the actual auto expenses route or take the quick tax deduction trip via the standard mileage rate, in both cases you get to add in the tolls and parking fees you pay.
Don't confuse 2011 and 2012 travel: While the IRS always issues the mileage rate adjustments at the end of the year, remember that these figures are for your 2012 tax return.
Travel in 2011 will require you to make double calculations since the IRS hiked the rates in July:
| Miles driven between |
Business | Medical | Moving | Charity |
| Jan. 1 and June 30 | 51 | 19 | 19 | 14 |
| July 1 and Dec. 31 | 55.5 | 23.5 | 23.5 | 14 |
Merry motoring and happy driving deductions to all!
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Jonathan
The government always seems to mess with mileage rates, it’s te same in the UK where I’m resident. I don’t understand why they can’t just keep them static and change them every few years.