Gas Prices Got You Down? IRS Ups Mileage Rates for Rest of 2011
Posted on Thu, Jun 23, 2011
Good news for business owners contending with rising gas prices -- The Internal Revenue Service is raising the optional standard mileage rates for the remainder of 2011.
The new rate will be 55.5 cents per mile for business miles driven from July 1, 2011 to Dec. 31, 2011. This represents a 4.5 cent per mile increase from the 51 cent rate of the first half of the year.
The IRS normally updates mileage rates just once annually in the fall for the next year. However, they recognized the impact of gas price increases on taxpayers and made a special adjustment for the rest of 2011, according to the IRS announcement. Depreciation, insurance, and other expenses also figure into their mileage rate calculation.
Taxpayers can choose whether to calculate actual vehicle expenses or standard mileage rates. Many employers use the optional business mileage rate to reimburse mileage costs to employees on their payroll.
The mileage rate for medical and moving expenses also is increasing to 23.5 cents per mile, up from 19 cents per mile. The mileage rate for charitable purposes will remain the same at 14 cents per mile.
If you're reimbursing employees for their mileage costs, be sure to update your payroll program to accommodate for the change. Also, maintain accurate dated records of your mileage to avoid confusion at tax-time.
Photo Credit: Ben Earwicker, Garrison Photography