By David L. Marrison, OSU Extension Educator
On December 3rd, the Internal Revenue Service issued the 2011 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, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 51 cents per mile for business miles driven (up from 50 cents per mile in 2010); 19 cents per mile driven for medical or moving purposes (up from 16.5 cents per mile in 2010); and 14 cents per mile driven in service of charitable organizations (same as 2010).
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.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
For an additional resource to answer those tough farm tax questions, farmers can receive a free copy of IRS Publication 22, the 2010 Farmers Tax Guide at their local county OSU Extension office. The 2010 Farmer’s Tax Guide is an 89-page publication that explains how the federal tax laws apply to farming. This guide can be used as a guide for farmers to figure taxes and complete their farm tax return.
Some of the new topics for the 2010 tax year which are included in this publication are: standard mileage rate, increase in deduction for start-up costs, limitation on excess farm losses, increased section 179 expense deduction dollar limits, extension of special depreciation allowance, property eliminated from definition of listed property, decrease in personal casualty and theft loss limit, disaster losses, self-employed health insurance deduction, and wage limits for social security tax. More information can be found at the IRS website at: http://www.irs.gov/publications/p225/index.html.
The Rural Tax Education Site has an example Schedule F on their web site to help producers as they complete their Schedule F. The sample return can be found on web site at: http://ruraltax.org/.
Click here to access a printable PDF version of the 2010 Farmer’s Tax Guide
This blog article was written by using a press release provided by the Internal Revenue System.