In 2011, a vehicle used for business purposes will be able to claim 51 cents instead of the 50 cents in 2010 according to the Internal Revenue Service.

The IRS announced the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning January 1, 2011, the standard mileage rates for the use of an automobile will be:

  • 51 cents per mile for business miles driven
  • 19 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

You always have the option of deducting actual vehicle costs rather than using the standard mileage rates. You would need to calculate the difference to help you decide which is more beneficial.

The IRS Mileage Rate simply means documenting miles driven while actual vehicle cost requires you to document gas, repairs, depreciation, tolls, etc., but you also have to decide what percent your vehicle is used for business and personal use.

Another consideration, are you using your vehicle for medical, moving or charity purposes? Those can also be deducted as standard deduction. One final thought, are you leasing a business vehicle? If so, it may make sense to do the actual cost instead of the standard deduction.

There are some rules as to when you can not use the standard mileage deduction. 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.

Also, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

If trying to figure this out gives you the cold sweats, then it is time to call your local Liberty Income Tax Preparation office. We will make this painless for you!

-david rocci

Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.