Friday, December 4, 2009

Tax News: Standard Mileage Rate for 2010

The IRS has released the 2010 optional standard mileage rates that employees, self-employed individuals and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes. The mileage rates are all lower than they were for 2009, reflecting generally lower transportation costs.

The standard mileage rate for business mileage in 2010 will be 50 cents per mile (vs 55 cents per mile for 2009).

The business standard mileage rate is used on a yearly basis, instead of computing actual costs, such as depreciation, lease payments, maintenance and repairs, tires, gasoline, oil, insurance, and license and registration fees. However, the taxpayer may continue to claim separate allowable deductions for parking fees and tolls, interest relating to the purchase of the vehicle, and state and local personal property taxes.

The standard business mileage rate may not be used for automobiles used for hire (such as taxicabs) or when five or more automobiles are owned or leased and used simultaneously by the taxpayer (such as in fleet operations).

The standard mileage rate for medical and moving expenses will be 16.5 cents per mile.

The standard mileage rate for charitable purposes will remain at 14 cents per mile.

The updated rates are effective for deductible transportation expenses paid or incurred on or after January 1, 2010.