IRS Increases Mileage Rate to 55.5 Cents per Mile

The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Schulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."

This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Now's the time to get your annual tax tune up.  Review your current year's situation with your tax adviser to make sure you're taking advantage of every deduction you're entitled to.  It's also a good idea to review income changes (up or down) to make sure you're having the right amount of tax withheld or paid via quarterly estimated payments.  Your tax adviser can annualize your current situation and help you fine tune things for April 15th while you can still do something about it.

As always, Tune Ups are free here at Security Tax Services for current clients.  Schedule your appointment today!

Robert A. Branting, Sr., EA

Security Tax Services LLC

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