Update: This article is about the 2012 IRS mileage rate. Information about the 2013 IRS standard mileage rates is here.
The IRS allows taxpayers to claim certain automobile travel expenses. Typically, to be deductible the travel must fall into one of four categories:
- Deductible business travel
- Deductible miles driven for charity
- Deductible miles driven for medical reasons
- Deductible miles driven for moving
Automobile travel can be deducted in two ways. First, the taxpayer may deduct the actual expenses for miles driven. To deduct your mileage this way, you must keep detailed records and save receipts for gas, maintenance and anything else relating to your tax deductible usage of an automobile. Most taxpayers find this too burdensome and rely on the optional mileage rate deduction instead.
IRS Mileage Rate 2012 Mid-Year Adjustment
In years when the price of gas varies greatly from the beginning of the year, the IRS may make a mid-year adjustment to the deductible mileage rate. There is no mid-year 2012 adjustment for the mileage rate. All the IRS mileage deduction rates were the same for all of 2012.
IRS Mileage Tax Deduction Rates
- The 2012 standard mileage rate for business miles driven is 55.5 cents per mile.
- The 2012 mileage rate for miles driven for medical purposes or miles drive for moving purposes is 23 cents per mile.
- The mileage rate for 2012 for miles driven in service of charitable organizations is 14 cents per mile.
Remember that although the mileage rate is tied closely to the price of gasoline, that is not all that is included in the rate. The tax deduction includes wear and tear on the automobile, depreciation (the gradual lower of value over time), and maintenance and repairs. As such, for all but the lowest miles per gallon vehicles, these amounts should represent a larger deduction than just the cost of the gasoline used to drive these deductible miles.
Deducting Mileage Driven to and From Work
Every year, someone asks about deducting the miles spent commuting to and from work. The IRS specifically forbids deducting any miles driven for the purposes of normal commuting to work. However, if you are required by your employer to drive additional miles, but are not reimbursed for those miles, you may deduct such mileage as an unreimbursed business expense.
When such mileage occurs, only the part that occurs in addition to the commute is deductible. Simply going to a different office that is further away is not deductible.
Mileage deducted by average taxpayers tends to come from either jobs that require driving around to meet customers and clients (sales, or support, for example), or from self-employed or commission-based employees driving miles necessary to perform their business.
Don’t forget to look at our other 2012 Tax Tips and Tricks.