According to the IRS.gov website the IRS Mileage Rate for 2013 is
[box]Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
56.5 cents per mile for business miles driven.
24 cents per mile driven for medical or moving purposes.
14 cents per mile driven in service of charitable organizations.
The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.[/box]
The Internal Revenue Service uses several instruments to lower the burden of taxpayers. One of the most useful of these is the use of personal vehicle for medical, charitable or business purposes by you as a taxpayer. These indices are used to calculate the deduction of taxes based on IRS mileage rate. Actually the deduction is drawn based on the actual use of vehicles comprising of fuel use, insurance expenditure and regular wear and tear. With a view to simplify the system IRS introduced the mileage rate to use as the tax deduction index. In actuality this is fixed offer of IRS per mile of the particular vehicle activity.
Mileage Rate Calculation:
Every year the IRS publishes a predetermined mileage rate on different category of vehicles. This is usually valid for a year. Variant fuel prices are the main reason of annual pricing. The rate is determined through a thorough independent survey by a neutral agency. Several factors are taken up during the course of the survey. A nationwide survey report helps to find the average fuel expenditure. Fixed cost expenditures are irrespective of the use of the vehicle. These include the cost of the vehicle along with registration charges, insurance coverage and other statutory taxes.
Variable charges principally include fuel expenses, maintenance cost and parking charges with taxes thereof. All these factors are taken into consideration during mileage rate calculation. You can always use the mileage rate published by the IRS to calculate your tax benefit through the use of your vehicle.
Fallacy About Mileage Rate:
It is a fair and a wide misconception that there is no upper limit of these mileage rate deductions. IRS strictly specifies the maximum amount that can be reimbursed. Moreover IRS authority takes every special care during fixing of rate every year. With a thorough and planned use of your vehicle you can maximize your tax benefit plan in this manner. Most of the employers reimburse their employee vehicle expenditure at par with the IRS determined rate. Any higher amount attracts extra tax burden.
Changes in the Mileage Rate for 2013:
The recent release of mileage rate by the IRS for the year 2013 shows an increase compared to the previous years. This helps the self-employed, the employees, as well as the taxpayers to calculate the tax-deductible costs of transportation for business, medical, moving, and charitable purposes. The elevated rates are all set to come to effect from January of this year. It is necessary to remember that the rates do not signify employee payments. However, it surely helps the employees and self-employed people to calculate the approximate value of transportation costs for tax deductions.
Taxpayers can also calculate the total costs of vehicle use and then deduct the amounts instead of going with the mileage rates set by the IRS. This is especially true for employees that get transportation reimbursement from their company. In such cases, the rates are lower when compared to the actual mileage rate as mentioned by the IRS. The IRS mileage rate is a yearly phenomenon and since there is no formula in publication, it leads to speculations at the beginning of every year.