Mileage Tax Deduction Rates

The 2011 IRS mileage rate for 2011 (to be filed in April 2012) is broken into two parts. Also the medical and moving miles was increased for the second half of the year. The IRS made a special adjustment for the final six months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

The business mileage rate for the first six months of the 2011 tax year is 51 cents per mile for business miles driven.

The business mileage rate for the last six months of the 2011 tax year is 55.5 cents per mile for business miles driven.

The mileage rate for moving or medical miles is 19 cents per mile during the first six months of 2001 and 23.5 cents per mile for those miles incurred during the second six months of the year. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents per mile for the full year.

The business mileage rate for the 2010 tax year (to be filed in April 2011) was 50 cents per mile for business miles driven. The business mileage rate for the 2009 tax year (to be filed by 15 April 2010) was 55 cents per mile.

But wait. You've known about the IRS mileage deduction for years. You are a business man or woman for goodness sake. This is nothing new. "Come on tax-deduction-tips.com, is that the best you got? Please. Everybody knows about mileage."

Here's the thing. Would you agree that it's a giant pain to keep track of the miles every time you get in and out of the vehicle? Or, if you're like many people, when you get home after a long day and then think "Oh no, I gotta write down all my trips from today, Jeez, I hope the IRS isn't lookin' too close. It was a long day. I'm gonna hafta fudge it a little bit." If you don't find this part of the process a giant painful disruptive hassle to your life, you're superman. But look at it from the point of view of the IRS. If they didn't require this documentation, more than a few folks would be claiming 50,000 miles per year with no proof. The IRS would say "no you didn't" and the taxpayer would say "yeah I did" regardless whether the taxpayer did or whether he really thinks that he did. In order to claim the deduction you gotta have the detailed documentation (until now, handwritten logbook documentation). That is the only way the system would work and then you could get your deduction. Not anymore. Technology to the rescue.... But first, lets remind those who have forgotten the math:

Remember to use the correct cents per mile for the year you are calculating, the IRS changes the cents you get every year.

Example: Let's say our guy is a construction contractor. He drives his pickup all over the place for work. A contractor like this could go 150 - 200 miles on a work day. Lets look at an example of 35,000 miles per year. This year is a special year (2011) since we have two halves of the year to work out. Let's say our guy drives 35,000 miles total business miles during 2011. Our guy drove 17,000 miles during the first six months x 51 cents per mile = $8,670. And he drove 18,000 miles during the second six months x 55.5 cents per mile = $9,990. A grand total of an $18,660.00 tax deduction. Yikes! No matter what bracket you're in we're talking monster dollars.

Are you still thinking: This ain't no tip. Everybody knows about mileage deductions. Come on tax-deduction-tips.com.  Give me something I can use.......Okay. Drum roll please......

Good news for those of you who are heavy mileage people. Technology to the rescue. We located an excellent technology solution for you:

IRS Mileage Tracking Technology Solution

With MileBug you can track your mileage on your iPhone in just a few taps.   Separate and sort by driver, trip purpose, vehicle and location while creating separate mileage reports for each. Whether you need an iPhone mileage tracker for tax reports, business reimbursement, charity purposes or just to help keep organized.

You have the option to export the information you need by any given date range, month, or day via an Excel-friendly format. Customize tracking and sort by driver, vehicle, location, trip type, and manage trip details such as business, personal, and medical.

You will need an active itunes account to download this app. The full app is $2.99 but there is a free version which only holds up to ten trips at a time. After the first ten you have to download them and then you can start again with ten more trips.   Keep doing that for free for as long as you want.   But the full app is only $2.99 when you want to quit downloading them after every ten trips. Also, ten trips is good enough to give it a chance and see if it works for you.

The only drawback on this one is you will have to touch your iphone each time you take a trip. But most people with an iphone are touching the bejeezus out of it all day long anyway.

MileBug is also available for the Nokia/Symbian system and for Android. As far as we know it is not available for Blackberry. If you are already using Blackberry instead of the iphone or one of the others, we will let you know when we find a solution for your setup.