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2012 Standard Mileage Rate The standard mileage rate for business mileage in 2012 will be 55.5 cents per mile. When a taxpayer uses this mileage rate for automobiles the taxpayer owns, depreciation will be considered to have been allowed at a rate of 22 cents per mile. This depreciation reduces the taxpayer's basis in the automobile. The 2011 rates were set at 55.5 cents post 6-30 and 51 cents pre 7-1 and 23 cents per mile by Rev. Proc. A taxpayer computes a deduction using the business standard mileage rate on a yearly basis, in lieu of computing the fixed and variable automobile costs allocable to business purposes, such as depreciation, lease payments, maintenance and repairs, tires, gasoline, oil, insurance, and license and registration fees. However, the taxpayer may continue to claim separate allowable deductions for parking fees and tolls, interest relating to the purchase of the automobile, and state and local personal property taxes. The standard business mileage rate may not be used when five or more automobiles are owned or leased and used simultaneously by the taxpayer (such as in fleet operations). Rules providing for substantiation of an employee's ordinary and necessary expenses for local travel or transportation away from home are also provided. Such expenses will be deemed substantiated when the employer, its agent or a third-party provider provides a mileage allowance under a reimbursement or other expense allowance arrangement. Medical, Moving Mileage Rate The 2012 standard mileage rate for medical and moving expenses will be 23 cents per mile. The 201 rate was 23.5 cents per mile post 6-30 and 19 cents per mile pre 7-1. Charitable Mileage Rate The 2012 standard mileage rate for charitable purposes will remain at 14 cents per mile. Employee's Per Diem Allowance for Travel Away From Home Exclusive of Transportation Costs Per diem allowances paid to an employee for lodging, meal and incidental expenses (M&IE) paid or incurred for business travel while away from home are deemed substantiated under the following rules. Under the per diem substantiation method, if a payer pays a per diem allowance in lieu of reimbursing actual expenses, the amount of the expenses deemed substantiated equals the lesser of: IRS regulations authorize the issuance of guidance regarding the use of a specified amount or amounts for incidental expenses paid or incurred while traveling away from home in lieu of substantiating actual expenses. Taxpayers will not be relieved of the requirement to substantiate the actual cost of other business expenses and the time, place and business purpose of the travel.146 Alternatively, the payer may use the high-low substantiation method for travel within CONUS.147 CONUS is the continental United States, exclusive of Alaska. Under this method, the amount of expenses that is deemed substantiated is the lesser of: the per diem allowance; or the federal per diem rate for the high- or low-cost locality, as applicable.148
The federal per diem rates for the high-low method are: For Travel Beginning | Rate |
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On or after October 1, 2011 | $242 for high-cost localities ($177 for lodging and $65 for M&IE); $163 for low-cost localities ($111 for lodging and $52 for M&IE).1 | On or after October 1, 2010 | $233 for high-cost localities ($168 for lodging and $65 for M&IE); $160 for low-cost localities ($108 for lodging and $52 for M&IE)2 | | | | | | | | | | | | | | | | |
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