What is the standard mileage rates autos, vehicles, trucks for 2012? By Jeffrey Brooks, CPA, CFP, MBA

If you have been taking the “actual cost method”, you will have to continue using this method. The advantage of the actual expenses or cost method is that you can get a significant tax depreciation deduction or write off. However if you buy a car with a lower cost, you need to have your CPA check to see if it would be better to take the cents per mile method. For example, if you buy a used vehicle for $15,000 and drive the vehicle a lot of business miles, you might be better off using the standard mileage rates.

IRS issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Notice 2012-1.

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

  • (1) 55.5 cents per mile for business miles driven;
  • (2) 23 cents per mile driven for medical or moving purposes; and
  • (3) 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 mileage rate that applies to the deduction for charitable contributions is fixed under Code Sec. 170(i) at 14 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.
    • Taxpayers have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
    • A taxpayer cannot 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 Code Sec. 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles simultaneously.
    • A taxpayer must reduce the basis of an automobile used in business by the amount of depreciation the taxpayer claims for the automobile. If a taxpayer uses the business standard mileage rate to compute the expense of operating an automobile for any year, a per-mile amount is treated as depreciation for those years in which the taxpayer used the business standard mileage rate. If the taxpayer deducted the actual costs of operating an automobile for one or more of those years, the taxpayer may not use the business standard mileage rate to determine the amount treated as depreciation for those years. For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 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.

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.

If you enjoyed this article, please consider sharing it!
Icon Icon Icon
RSS FEED

Search

No Obligation FREE Evaluation: Guaranteed to Reduce Your Taxes

602-292-2009

Name:*

Email:*

Company:

Comments:

Security Code:
captcha
Please enter the code shown above:

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.

Get In Touch

JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009
Email: jeff@jbrookswa.com