Tuesday, November 25, 2008

THIS JUST IN - 2009 STANDARD MILEAGE ALLOWANCE RATES

The Internal Revenue Service has announced the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

* 55 cents per mile for business miles driven
* 24 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

As I had expected, the new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008, raised by a special mid-year adjustment in response to high gas prices. Considering that current gas prices are less than half what they were a few months ago the new standard mileage allowance rates are generous.

The rate for charitable purposes is set by law and remains the same as it has been for several years now, which is something Congress needs to address.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

According to the IRS –

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study
.”

11 comments:

Anonymous said...

"Considering that current gas prices are less than half what they were a few months ago the new standard mileage allowance rates are generous."

I beg to differ--standard mileage allowance has not kept up with gas prices in the last 20 years and therefore, the new allowance is anything other than generous. It should have stayed where it is, maybe higher. Given the current deterioration of the Big 3, now our vehicles will be valued at nothing, our reimbursement will be valued at nothing and the government will continue to tax us even more with the new administration. GREAT

mark walker said...

to cut my taxable income, i do volunteer chair massages and write off the bill i would have taken in, as well as the mileage, is this considered work rate or the charity rate? need to know as i build my own spreadsheets and may need an additional column for the other rate... check me out at http://walkermassage.com

Robert D Flach said...

MW-

(1) When you say that you “write off the bill I would have taken in” do you mean that you claim what you would have charged a client for your services as a massage therapist as a charitable contribution? You cannot deduct the value of your time or services. If you would have charged the person $100.00 for the chair massage, but provided the service free as a volunteer for a qualified charity, you cannot deduct the $100.00 you “would have charged” anywhere on your tax return!

(2) You are providing volunteer services to a qualified non-profit organization (I assume) by giving chair massages to the residents, clients or beneficiaries of the organization. You can deduct your “out of pocket” costs, which include mileage to and from the place where you provide the volunteer service. The mileage is deductible as a charitable contribution on Schedule A – you would claim the 14 cents per mile.

The only exception that occurs to me off the top of my head is if you are providing these services at a non-profit hospital or rehabilitation center where you have paying clients and while you are there you happen to provide the service free of charge to certain “charity” patients. Since you are already traveling to the hospital or rehab center for a business purpose (i.e. to provide massages to paying clients) the mileage would be a business deduction at the business rate.

As with any other tax question more information on the specific “facts and circumstances” would be needed to provide a competent answer.

RDF

mark walker said...

thanks for the info, heres exactly what i do: i am a new business and need to attract new clients, so i offer free chair massages to entice them to call again for more chair work or table work. none of it is non-profit or anything like that, they are potential clients, everyday people. i sure hope i can write that off as it generates taxable income. thanks for the info.

Robert D Flach said...

MW-

Since you provide free massages as a way of promoting your business, then travel to these potential clients would indeed be part of the business promotion and, in my opinion, deductible as business travel on the Schedule C or other business return.

TWTP

Anonymous said...

My company requies myself and two other employees to drive to a training class, about 60 miles from the office. we all will be driving our owe vehicle leaving from home to the class. the problem is that they are having us split the mileage allowance driven by only one person. CAN THEY DO THAT?

Robert D Flach said...

Anon-

They can do whatever thay want.

Employer reimbursements are governed by the "plan document" - the company policy - and not the Tax Code.

Perhaps they assume that you should all be going together in one car.

TWTP

Anonymous said...

My employer has decided to pay 35 cents per mile not the standard 2009 rate. If he is allowed to do that, can I deduct the difference from the IRS rate and the rate the company pays from my tax return?

Robert D Flach said...

Anon-

Yes, you employer is allowed to reimburse you at a rate that is different from the federal Standard Mileage Allowance.

And yes, if your employer reimburses you at a rate that is less than the federal Standard Mileage Allowance you can deduct the difference.

Remember that employee business mileage is deducted as a "miscellaneous deduction" on Schedule A and is subject to the 2% of AGI exclusion.

The mileage is first reported on Form 2106 - the employer reimbursement is slso reported on this form - and the net amount is carried over to Schedule A.

TWTP

John said...

My employer pays 55 cents a mile for the first 14000 and then 16 cpm there after is the difference tax deductable?

Robert D Flach said...

John-

See my answer to Anon's similar question - which is above your comment.

TWTP