Finally a bit of a break! The Internal Revenue Service (IRS) recently issued Announcement 2011-40. Beginning on July 1, 2011 and continuing until December 31, 2011, Taxpayers will be entitled to use the mileage rate of 55.5 cents per mile for business use. This represents an increase from 51 cents allowed during the first 6 months of 2011. This upwards adjustment was inspired by the increased price of fuel in 2011. This is a special mid year adjustment made by the IRS to help ease the burden on taxpayers.
The business standard mileage rate above is used to calculate the deductible cost of operating a vehicle for business use. Business owners are still entitled to use the alternative method of tracking actual costs. The new rate for the remainder of 2011 for computing moving and medical expense mileage will increase to 23.5 cents per mile. This represents an increase of 4.5 cents per mile over the rate for the first 6 months of 2011.
Deciding on whether to use the IRS mileage rate or actual cost of vehicle use is a more complex question. For advice on the mechanics of the calculations and other factors that may impact your decision, we recommend that you contact your CPA. If you do not have a good working relationship with a CPA, we can assist you in finding one to match your needs. Should you wish, one of our attorneys would also be happy to discuss your options with you.