In determining mileage costs for charitable, medical, moving or business purposes, taxpayers generally have the option of calculating the actual costs of using their vehicle or using the standard mileage rates.  In most cases, you should calculate your costs both ways, and then choose the method that is most beneficial.  The IRS recently issued the new standard mileage rates used to calculate the deductible costs of operating an automobile for charitable, medical, moving, or business purposes.  The new standard mileage rate, beginning on January 1, 2012, is as follows:

Charitable Purposes.  The standard mileage rate for the use of a car, including vans, pickups, or panel trucks, will be 14 cents per mile driven in service of charitable organizations.

Medical or Moving Purposes.  The standard mileage rate for the use of a car, including vans, pickups, or panel trucks, will be 23 cents per mile driven for medical or moving purposes. This rate has been reduced by 0.5 cents per mile compared to the mid-year adjustment that became effective on July 1, 2011.  The standard mileage rate for medical and moving purposes is based on the variable costs as determined by an annual study of the fixed and variable costs of operating an automobile.  This study was conducted by Runzheimer International, an independent contractor.

Business Purposes.  The standard mileage rate for the use of a car, including vans, pickups, or panel trucks, will be 55.5 cents per mile driven in service of charitable organizations.  This rate is unchanged from the mid-year adjustment that became effective on July 1, 2011.  The rate is based on the same annual study that is used to determine the mileage rate for medical or moving purposes.

Restrictions.  A taxpayer may not use the business standard rate cannot be used for more than four vehicles used simultaneously.  Business standard rate may not be used for a vehicle if it was depreciated under the Modified Accelerated Cost Recovery System (MACRS) or if a Section 179 deduction was claimed for the vehicle.

Your tax preparer can provide you with more information regarding the standard mileage rate on your income tax return. StrataTax, a San Diego consulting and tax services firm, is available year-round to assist you with income tax preparation and tax planning.  Call us at (858) 225-7720 to setup your free initial consultation or visit us at www.StrataTax.com for more information.

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