Rising Gas Prices Lead to Larger Deductions

Who says rising gas prices hurt everyone?  Office runner and couriers will cheer the increase to their reimbursements for business trips. The IRS has announced that the mileage allowance for vehicles will increase 4.5¢ from 51¢ to 55.5¢ per mile for business travel from July 1, 2011 to December 31, 2011.  The mileage rate varies based on the annual study of the fixed and variable costs of operating an automobile.

Employees who drive their own vehicles for business purposes may receive reimbursement for business mileage whether the autos are owned or leased.  The rate of reimbursement must not exceed the business mileage allowance.  The employee receives the funds as a tax-free reimbursement if they substantiate the time, place, business purpose and mileage of each trip.

Also, the rate for using a car to receive medical care or in connection with a move that qualified for the moving expense deduction increases to 23.5¢ per mile.


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