If you are on the lookout for information on mileage reimbursement rules for 2012, you have landed on the right page.
The United States federal taxation system takes your car travel expenses into consideration and offers tax deductions based on your vehicle usage. If you have used a car, pickups, vans or panel trucks for business, charity or moving related travel, you are eligible for tax deduction. While filing your tax returns, you need to know what are the reimbursement rules for the current assessment year are, to claim a tax break. The IRS mileage rates keep getting modified according to current market rates for gasoline, the cost of operating a vehicle and the state of US economy.
The updated rules for mileage reimbursement were announced by the IRS on December 9, 2011 and they became effective from January 1, 2012. With gas prices remaining more or less stable in the recent past, changes in reimbursement rates weren’t expected. In the following lines, I have presented most of the details related to mileage reimbursement, that any tax payer should know about.
Reimbursement Rules For 2012
The tax deductions related to car use, offered by US Federal tax laws are applicable to travel related to some specific purposes. Don’t expect your recreational travel related expenses to be reimbursed. Only business travel expenses, moving related expenses, as well as charity and health care travel related expenses are reimbursed. Business related travel has the highest reimbursement rate. If you have already claimed deduction under the Modified Accelerated Cost Recovery System (MACRS) or claimed a Section 179 deduction, then you are not eligible for mileage rate based reimbursement.
For Business Travel
This year, there is a change in the reimbursement rate related to the business related travel department. The standard business mileage reimbursement rate stays unchanged at 55.5 cents per mile in 2012. There are two ways in which you can claim deductions for business related travel. Either you could go for itemized deduction, based on actual expenses of business travel or claim deductions according to the standard reimbursement of 55.5 cents per mile.
The deductions apply to strictly business related travel. It goes without saying that one needs to supply sound evidence in the form of documentation, if one hope to take advantage of these tax deductions. For that, you must keep a detailed mileage expense account related to business travel.
For Moving Related & Health Care Travel
If you have incurred travel expenses related to moving or migration to a new place of residence or for health care reasons, you can claim tax deductions. The standard IRS mileage reimbursement for moving or health care related travel is 23 cents per mile. One must supply evidence to back up the claim for deductions.
If you have incurred charity related travel expenses, you can claim tax deductions. The standard IRS mileage rate for reimbursement, for charity related travel is 14 cents per mile in 2012. You will have to submit documentary evidence regarding charity related travel to claim the deductions.
As stated previously, it is important that you keep an accurate record of your business, health care related, moving or charity related travel expenses. Keeping accounts for your expenses is always beneficial in the long run, and more so when it comes to tax deductions!