The Internal Revenue Service (IRS) issued updated mileage rates, effective January 1, 2021, which have mostly decreased from 2020. These standard rates apply for the use of a car (vans, pickups or panel trucks).
|Description – Rate per cents per mile||2020||2021|
|Medical or Moving (see below) Purposes||17¢||16¢|
|In service of charitable organizations||14¢||14¢|
Taxpayers do have the option of calculating the actual costs of using their vehicle for business as opposed to using the standard mileage rates listed above.
Miscellaneous itemized deductions have been suspended under the Tax Cuts and Job Act for 2018 for tax years beginning after December 31, 2017 through December 31, 2025: The following are exceptions:
- Members of a reserve component of the U.S. armed forces, state or local government officials paid on a fee basis, and certain performing artists. They may deduct mileage expenses on line 11 of Schedule 1, Additional Income and Adjustments to Income, of Form 1040, U.S. Individual Income Tax Return, and may continue to use the 56 cents-per-mile business standard mileage rate.
Self-employed taxpayers can deduct automobile expenses if they qualify as ordinary and necessary business expenses.
You can view [Notice 2021-02) for more information about computing the deductible costs of operating an automobile for business, charitable, medical or moving expenses purposes.
For more information or if you have questions, please contact us at 401-831-0200.