Motorists get a tax break for vehicle use

Published 7:39 pm Saturday, December 1, 2012

Motorists using their vehicles for business, medical or moving purposes, or in service of charitable organizations will be able to deduct 1-cent more for their mileage rate with the Internal Revenue Service in 2013.

The 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes will increase next year and standard rates will be as follows:

56.5 cents per mile for business miles driven;

24 cents per mile driven for medical or moving purposes; and

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, according to Dee Harris Stepter. The rate for medical and moving purposes is based on the variable costs.

Stepter said that 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, said Stepter.

Notice 2012-72 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.

For more information, contact a tax professional.