IRS Mileage Rates for 2011: Deducting Auto Costs From Your Taxes

Mar 21, 2011
Victoria Nicks

Mileage Rates Increased for Business Travel in 2011 - Stock Xchng Image by bjearwicke

Driving for business, charity, medical reasons or a move? Deduct your car's operating expenses, based on the Internal Revenue Service's 2011 mileage rates.

In preparation for 2011's taxes, keep track of your mileage throughout the year. You can deduct your car's operating costs based on the amount of miles driven, if you've used your car for business, charity, moving, or medical-related transportation.

Tax Deductions for Business

Driving your car for business-related purposes? The IRS has increased the 2011 rates by one cent from the 2010 rates. You can now deduct your mileage at a rate of 51 cents per mile, but make sure that you're documenting the miles driven, and only applying the rate to actual business travel. According to the IRS, you can even apply the mileage deduction to hired transportation, such as a taxi.

Although you can use business transportation to reduce your tax liability, there are a few situations in which you cannot apply a deduction for mileage. You cannot apply this tax deduction if you have already done one of the following:

Filed for depreciation to deduct the actual cost of operating your vehicle
Filed a Section 179 for bonus depreciation
Accepted reimbursement from your employer for the same driving expenses

Other Mileage Deductions

In addition to deducting the costs of driving for work purposes, you can deduct auto costs when you have to drive for other reasons as well. As always, you can calculate the actual depreciation of the vehicle, rather than deducting the mileage. If you choose to use the miles driven as the basis for your deduction, use the following rates:

Do you need to drive for medical care? You can deduct the miles you drive at a rate of 19 cents per mile in 2011, up from 16.5 cents per mile in 2010.
If you use your car to provide transportation as a service of a charitable organization, such as delivering donations, you can deduct 14 cents per mile. This rate is unchanged from the 2010 rate.
Have you moved? You can deduct driving expenses at a rate of 19 cents a mile, also increased from the 2010 rate of 16.5 cents per mile.

2011 Rates for Automobile Deductions

Whether you're driving for your employer, or for your own business, calculating expenses by adding up the mileage you used during your work-related travel is a simple way to deduct them from your tax obligation. If you're driving to provide unpaid help to a charitable organization, to receive medical care, or to relocate for a new job, you can deduct those travel costs as well. Be aware of the rules that apply to your deduction, avoid using the deduction for personal travel, and you can reduce your tax obligation by figuring out the costs of driving your car.

References:

Internal Revenue Service:

IRS Announces 2011 Standard Mileage Rates. Accessed March, 2011.
IRS Code Section 213(d) Eligible Medical Expenses.
Depreciation and Section 179 Expense. Accessed March, 2011.

This article is not intended to be used as tax advice. Consult a professional tax attorney, or the Internal Revenue Service, for personalized information.