On Friday, the IRS published their standard mileage rates for 2011. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
The 2011 rates are:
· 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
The business mileage rate is up 1 cent from 2010, the medical and moving rate is up 2.5 cents, and the charitable mileage rate has stayed the same.
On the business side, take the next few weeks to update your internal policies for items affected by these mileage rates i.e.:
· Travel billed to customers
· Reimbursement to employees
· Travel amounts charged to you by vendors
Many organizations I work with continue to reimburse an amount that is less than these standard rates. This may be something for you to consider.
Also, we continue to hear that congress is likely to pass some extension of the Bush tax cuts. On Friday, the Senate voted twice on measures to extend tax cuts and failed to pass either version. One version would have extended the tax cuts to families making less than $250,000. The other version would have extended the cuts to families making less than $1 million. Democrats supported both measures, but the Republicans did not (they still want tax cuts for all). Much of this was political posturing.
Behind the scenes, Democrats and Republicans are working on a compromise that is pointing to a short term fix (i.e. 1 or 3 year extension). It also appears that in this bill will be another extension of unemployment benefits and who knows what else will be thrown in. We are trying to follow the situation closely in order to give effective tax planning advice. Please stay tuned for updates.