On November 21st the Internal Revenue Service (IRS) issued the new standard mileage rates for 2013. Based on an annual study of the costs associated with operating an automobile, the rate per mile has increased for business, moving and medical driving. The new rates taking effect on January 1, 2013 are as follows:

• 56.5 cents per mile for business miles driven
• 24 cents per mile for medical or moving related miles driven
• 14 cents per mile for driving related to charitable activities (unchanged from 2012)

Use of the standard mileage rates simplifies record keeping as an alternative to calculating actual expenses incurred. However, taxpayers are not allowed to change to the standard mileage rate if accelerated depreciation or Section 179 expense was claimed for the same vehicle in a previous year. This option is also unavailable to operators of vehicles for hire or for more than four vehicles simultaneously.

The standard mileage rate is determined using various factors such as the state of the economy, gas prices, and the estimated cost of normal wear and tear on a vehicle; thus it is intended to reimburse over and above the amounts for which someone pays strictly for gas.

A member of the KLR Tax Services Group can help you with questions regarding the correct choice of method for your travel expenses or any of your year-end tax planning needs. Contact us at TrustedAdvisors@kahnlitwin.com or call 888-KLR-8557.