Will the IRS hike standard mileage rate?

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. My friend told me that the IRS has increased the standard mileage rate for 2012. Is that true? S.T.S., Denver

A. Not yet. But the IRS is fully aware of the impact that rising gas prices is having on business drivers. It has said that it will continue to monitor the situation. (IRS Office of Chief Counsel, No. 2012-0020, 3/30/12)

If it becomes warranted, it will adjust the current rate of 55.5 cents per business mile, plus related tolls and parking fees, for 2012. Based on past history, the IRS might provide a higher standard mileage rate for only the last half of the year.

Tip: Even with a higher standard mileage rate, business drivers may still produce a bigger deduction by using actual expense records.

Editor's Note: For more information on the standard mileage rate, which employers use to reimburse workers who drive their own cars on business, visit Start your engines! Mileage rate at 55.5 cents a mile.

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