Gasoline Prices Prompt IRS To Raise Mileage Rates

PRLog (Press Release)– Jun 23, 2011– Gasoline Prices Prompt IRS To Raise Mileage Rates

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By Andrea Coombes

Higher gasoline prices have prompted the Internal Revenue Service to make an unusual midyear increase to the standard mileage rate used to deduct the cost of business-related driving, the tax agency said Thursday.

The rate will jump to 55.5 cents per mile for travel in July through December, an increase of 4.5 cents from the rate of 51 cents a mile for driving used in January through June.

The rate for driving for medical purposes or if required for a job move rose to 23.5 cents per mile for the second half of the year from 19 cents in the first six months of 2011.

"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 Shulman in a press release. "We are taking this step so the reimbursement rate will be fair to taxpayers."

The statement came the same day that the International Energy Agency said it will tap emergency reserves of crude oil; after the IEA' chevrolet s statement, crude-oil futures prices plunged.

Generally, the IRS adjusts the mileage rate once a year, though the tax agency made a similar midyear change in 2008, pushing the rate then to 58.5 cents a mile, an increase of 8.0 cents from 50.5 cents in the first half of that year. In 2010, the mileage rate was just 50 cents, down from 55 cents in 2009.

A gallon of regular unleaded gasoline costs $3.61 on average nationwide, up from $2.74 a year ago, though that varies widely by state, according to a daily report from AAA, the travel group. In California, Connecticut, Illinois and New York, for example, a gallon averages between $3.80 and $3.90. In Alaska and Hawaii, it tops $4.

Taxpayers can choose to keep track of their precise expenses or use the standard mileage rate when calculating their business costs.

The standard mileage deduction is limited to companies using four or fewer vehicles. For larger companies ineligible to take the deduction, the IRS standard mileage figure is widely used as a benchmark in setting reimbursement rates for employees' driving expenses.

To determine the mileage rate, the IRS hires an independent researcher to analyze driving costs, including 1086274749  fuel prices, car maintenance and registration.

The m rc helicopter and car market place ileage rate for deducting driving costs related to charitable work is 14 cents a mile, as it has been for y audi ears. This rate is set by the U.S. Congress.

-By Andrea Coombes; 415-439-6400; AskNewswires@dowjones.com

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