The IRS has released (IRS Notice 2012-1) the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.
Beginning January 1, 2012, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
- 55.5 cents per mile for business miles driven;
- 23 cents per mile for medical or moving purposes; and
- 14 cents per mile driven in service of charitable organizations.
The standard mileage rate for business is determined based on an annual study of the fixed and variable costs of operating an automobile; the standard rate for medical and moving purposes is based on the variable costs as determined by the same study. The mileage rate for charitable work is determined by law.
Keep in mind that there may be limitations that preclude a taxpayer from using the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.
For purposes of determining the basis of a vehicle (e.g. when the vehicle is sold), the portion of the business standard mileage rate treated as depreciation was 21 cents per mile for 2008 and 2009, 23 cents per mile for 2010, 22 cents per mile for 2011, and 23 cents per mile for 2012.
A reminder: The IRS requires taxpayers who claim a mileage deduction to maintain contemporaneous records showing the date, business mileage, and business purpose of the trip. If a mileage log book is not maintained, the IRS has the right to totally disallow the deduction claimed.
