Once each year, the Internal Revenue Service publishes mileage reimbursement information for the upcoming calendar year. This information includes reimbursement categories, rates and eligibility requirements. While you may already be aware that mileage relating to business travel is deductible, this is not the only reimbursement category. It is important to conduct an annual review of IRS mileage regulations to determine whether you qualify and to better plan for the next year taxes.
You can claim mileage if you drive a car, truck, van or panel truck for business, medical, moving or charity related reasons. In addition, when traveling for business you may also claim a mileage deduction for the cost of fee-based transportation such as bus fare or a taxicab. According to IRS regulations, the expense must occur during the tax year in which you claim the expense and you must be able to substantiate, or provide proof, you incurred the expense.
The IRS allows you to choose between one of two options when claiming mileage. First, you can claim a standard deduction using IRS reimbursement rates. As of 2011, the reimbursement rate for business travel is 51 cents per mile, the rates for medical or moving travel are each 19 cents per mile and for travel services you perform for a charitable organization, the rate is 14 cents per mile. A second option is to record expenses as they occur and deduct actual expenses.
Regardless of the method you choose, the IRS limits your annual deduction to $26,900 for a car $28,200 for a truck or van (as of February 2011). If mileage is due to business travel, you may not use the IRS standard mileage rate to deduct fee-based transportation expenses. The IRS also prohibits you from using the standard rate if your employer owns the vehicle, and it is part of a fleet operation consisting of five or more vehicles, or if your employer uses an asset depreciation method called the Modified Accelerated Cost Recovery System.
The intent of the mileage deduction is to reimburse you for fixed and variable costs you incur when using your vehicle for other than personal reasons. Differences in amounts the IRS allows relate to the intent of the deduction. For example, although the mileage deduction in all categories includes fuel and oil, only the business mileage deduction makes an allowance for costs such as depreciation, lease payments, vehicle insurance and license/registration fees.
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