It’s that time of year again. Time for tax relief. The IRS has just announced the new mileage rates, and taxpayers everywhere are making note of the fresh numbers. Beginning in 2012, the “MMBC” rates, which stand for “medical, moving, business, or charitable” related mileage expenses for deductible costs of operating a vehicle are: For charities, 14 cents; for medical or moving purposes, 23 cents; and for business, 55.5 cents per mile. You might notice that there are a few changes from last year’s rates, not for the business category, but for medical and moving, the rate has been cut by a half-cent in each category.
If you are unhappy with the standard deductible rates and need more tax relief, don’t fret. You can always use actual numbers, which often come out to be much higher or lower than the standard numbers. That means you had better be ready to do some calculating. Most people who do a lot of deductible driving calculate the expense under both the standard and actual methods, then take the better of the two possibilities. When it comes to the business rate, there are a few restrictions. If you have used a MACRS depreciation system on a vehicle in business use, then you cannot use the standard mileage deduction method. In addition, you can’t use the standard mileage deduction amounts for more than four vehicles at any one time. That might not make sense, but it is the law, so if you need tax relief, make sure you fill out the forms properly.
How does the IRS come up with these numbers? Each year the service hires Runzheimer International to do the actual collection of data that relates to fixed as well as variable costs of operating different types of vehicles. For business, medical, and moving standard deduction rates, this data is used to come up with a final allowed IRS amount. Since the study is repeated each year, the numbers sometimes change, up or down, and sometimes remain the same. Occasionally, like this year, some categories are altered, while others remain the same.
Before beginning the actual calculation for your particular tax return, be sure to check the IRS website at www.irs.gov, and look up all the peripheral rules and regulations that pertain to your particular case. Maybe you just had one vehicle for deduction purposes. Perhaps you had a dozen, and thus are wondering how to treat those in excess of the four business deductions allowed. The IRS website is the place to go to find all the pertinent information in order to get tax relief.