ארה"ב: עליה בהחזר עבור כל מייל בשנת 2011
Although driving a car does in fact cost some tax dollars (for example, fuel taxes), the tax law also compensates to some extent by allowing deductions for use of the car for business, charitable, medical, or moving purposes. On December 3, 2010, the IRS released its annual optional standard mileage rates that may be used in computing automobile deductions. See IR-2010-119 at www.irs.gov and Notice 2010-88.
The new rates, applicable for auto use after December 31, 2010, are 51 cents per mile for business use, 19 cents per mile for medical or moving use, and 14 cents per mile for charitable use. The business and moving rates are increases from the 2010 rates of 50 cents per mile for business and 16.5 cents for moving. The charitable rate of 14 cents per mile does not vary from year-to-year because it is fixed by statute.
The rates are based on an annual study of fixed and variable costs of operating an automobile conducted for the IRS by an independent contractor. The rates for business and moving differ because the rate for business use includes fixed costs such as depreciation, which are not allowed as medical or moving deductions. Both rates include variable expenses such as fuel. Taxpayers are also allowed to deduct items such as parking and tolls in addition to the standard mileage rate.
Use of the standard deduction rates is optional; taxpayers are always free to determine their own actual costs of operating a vehicle. However, such costs must be substantiated through detailed records, while the use of the standard rates avoids any need to substantiate the underlying costs incurred, although taxpayers must still maintain records of the miles driven and the purpose of each trip.
Notice 2010-88 also provides for the first time amounts by which taxpayers using the standard business mileage rate must reduce the basis in their automobile for depreciation that is included in the standard mileage rate. Those amounts are 19 cents per mile for 2007, 21 cents per mile for 2008 and 2009, 23 cents per mile for 2010, and 22 cents per mile for 2011. These and other issues relating to substantiation of automobile costs are explained in detail in Rev. Proc. 2010-51, www.irs.gov ,also issued on December 3, 2010.
Some companies use mileage rates higher than the standard rates to reimburse business travelers or transferees. In such cases, the excess amounts are treated as taxable wages, and are subject to withholding and payroll taxes. Amounts up to the standard mileage rates are excluded from the income of the employee.
Generally, the rates the IRS announces in December remain in effect during the entire following year, regardless of changes in underlying costs. However, in 2008 the IRS changed the rates in mid-year due to a dramatic rise in fuel costs.
Currently, gasoline costs have been rising steadily for a couple of months, and are predicted to go higher. It remains to be seen, however, whether fuel costs will escalate to the point that they require another mid-year increase in the standard mileage rates, or contribute to growth in the number of non-driving “tax evaders.”