Auto Related Tax Tips

All you may have wanted to know about taxes related to autos and how it can help you! Please call Jeffrey Brooks CPA at 602-292-2009 for questions or comments.

Question: If your auto or truck has been fully depreciated can you start taking cents per mile?

No, although I wish you could, you may not claim the standard mileage rate for the vehicle for all subsequent years that the vehicle is used for business purposes. However, you can continue to claim the actual expenses related to your business use of your vehicle such as insurance, license, repairs, gasoline, and car washes.

Self-employed taxpayers and employees generally may use either the actual cost method or the standard mileage rate method in computing deductible auto expenses (whether the vehicle is owned or leased). However, the standard mileage rate method cannot be used unless the taxpayer so elects in the first year the vehicle is placed in service. A taxpayer may change from the standard rate to the actual cost method, but must then use SL depreciation for its remaining estimated useful life (subject to the luxury auto limits of IRC Sec. 280F).

Remember, The standard mileage rate is in lieu of all operating and fixed costs of the automobile allocable to business purposes. Items such as depreciation (or lease payments), maintenance and repairs, tires, gasoline (including all taxes thereon), oil, insurance, and license and registration fees are included in operating and fixed costs for this purpose.

IRS Announces 2012 Standard Mileage Rates from irs.gov

IR-2011-116, Dec. 9, 2011
WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use 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. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

IRS Announces 2011 Standard Mileage Rates

Update — For information on mid-year mileage rate increases for July 1 through Dec. 31, 2011, see IR-2011-69.
IR-2010-119, Dec. 3, 2010

Corrected on Dec. 13, 2010, to reflect changes for 2011

WASHINGTON — The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 51 cents per mile for business miles driven
• 19 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

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Address: 4647 N 32nd Street, Suite B245
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Phone: 602-292-2009
Email: jeff@jbrookswa.com