The IRS will increase the standard mileage rate from 51 cents a mile to 55.5 cents a mile for all business miles driven from July 1, 2011 through December 31, 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. They have recently made a special adjustment in light of the high gas prices. The last time the IRS wrecked havoc on tax preparers with a mid-year mileage rate change was in 2008 when it jumped from 50.5 to 58.5 cents for business miles and from 19 to 27 cents for medical and moving miles. Although, a welcome relief by many, it does add a recordkeeping burden to many affected taxpayers and tax preparers.
Unfortunately, this does not benefit everyone. This affects taxpayers who are reimbursed for business travel or who deduct the standard mileage rate for unreimbursed business travel. Commuting to and from work is not considered business mileage. Self-employed individuals will need to take special precaution to track miles driven prior to July 1, at the 51 cent rate and miles driven after June 30th at 55.5 cents, for tax purposes. The standard mileage rate takes into consideration depreciation, insurance, and other fixed costs of operating a vehicle and is used in lieu of calculating (and keeping receipts) for actual expenses. Parking and tolls are calculated separately.
Medical and moving miles will also increase from 19 cents to 24.5 cents a mile starting July 1st. Those who claim these expenses will need to specifically track the dates these events occur to ensure the proper amount is calculated. Charity miles remain at 14 cents a mile, so if you are a conscientious volunteer, you may want to start taking the bus.
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