End Of The Year Tax Planning – GRATs
December 1, 2011
New Form 1099 Rules For 2012
December 23, 2011

IRS Releases 2012 Standard Mileage Rates

The IRS has released Notice 2012-1, which details the standard mileage rates taxpayers should use in 2012.  Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes.

•    For business use of an automobile, the standard mileage rate for transportation or travel expenses remains at 55½ cents per mile.

•    For gratuitous automobile services rendered to a charitable organization under § 170, the standard mileage rate is 14 cents per mile.

•    For automobile use incurred as a result of medical expenses under § 213 or moving expenses under § 217, the standard mileage rate is 23 cents per mile.

Rather than using the standard mileage rates, taxpayers may instead use their actual costs if they maintain adequate records and can substantiate their expenses.  The rules for substantiating these amounts appear in Rev. Proc. 2010-51.  For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2012 (it was 22 cents per mile for 2011).

The notice is effective for (1) deductible transportation expenses paid or incurred on or after January 1, 2012, and (2) mileage allowances or reimbursements paid to an employee or to a charitable volunteer (a) on or after January 1, 2012, and (b) for transportation expenses the employee or charitable volunteer pays or incurs on or after January 1, 2012.