Mileage Rates for business, moving, charity, medical for Tax Year 2011

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2012
2011 «You are here (There are two rates for 2011)
2010
2009

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2011 Mileage Rates
Reason Vehicle Used	Jan. through June	July through Dec.
Business	51 cpm	55.5 cpm
Medical	19 cpm	23.5 cpm
Moving	19 cpm	23.5 cpm
Charitable	14 cpm	14 cpm

Interest on Vehicle Loan is Deductible for Self-Employed Persons

If you're self-employed, used your vehicle for business during 2011, and paid interest on a loan for that vehicle during 2011, the interest is deductible. This is an additional deduction over and above the IRS mileage allowance.

If your were an employee, sorry, you don't get to deduct car loan interest, even if you used your vehicle 100% for your job.

How to Deduct the Interest:

Simply add the interest you paid on your vehicle loan during 2011 to your total your mileage allowance (or to your actual operating expenses, if you're claiming actual expenses instead instead of the mileage allowance). Enter your total deduction on Schedule C, line 9.

If you used your vehicle for both business and personal purposes, you may only deduct the portion of the total deduction that relates to business use.

Example:

The Facts:

Your business is organized as a sole proprietorship. Therefore, you're classified as a self-employed person.
You used your car for both business and personal purposes during 2011.
Your vehicle was first placed into service for business use in 2010, when you started your business. You claimed the IRS mileage allowance in 2010.
For 2011, you elect to claim the IRS mileage allowance again.
Your total miles traveled during 2011 were 20,000, broken down as follows:
- Business miles: 16,000
- Personal miles: 4,000
Your business-use percentage is 80% (16,000/20,000).
There are two business mileage rates for 2011.
- January 1, 2011 through June 30, 2011: 51 cents per mile
- July 1, 2011 through December 31, 2011: 55.5 cents per mile
Since your business is not seasonal, your business miles traveled through the year were spread out evenly.
- You split the 16,000 business miles traveled in half for purposes of applying the two rates (8,000 first half and 8,000 second half).
You had a loan on your vehicle and paid $2,000 in interest during 2011.
You did not pay any tolls, parking fees, or towing expenses during 2011.

Result:

Your total deduction is: $10,520, figured as follows:
- Mileage allowance for first half of 2011: $4,080 (.51 x 8,000)
- Mileage allowance for second-half of 2011: $4,440 (.555 x 8,000)
- Interest on car loan: $2,000
- Your total deduction equals:
  - Mileage allowance of: $8,520 ($4,080 plus $4,440)
  - Plus $2,000 interest on car loan
You report the $10,520 on Schedule C, line 9

Tolls, Parking Fees, and Towing Charges

The mileage allowance takes into account the vehicle's operating expenses such as gas, oil changes, repairs, etc. as well as depreciation. It does not take into account tolls, parking fees, or towing charges. However, they are deductible.

In the above example, had you paid tolls, parking fees, or towing charges during 2011, you would have added them to your mileage allowance along with the interest on the car loan and deducted the total, minus the personal use portion (20%), on Schedule C, line 9.

How to Convert Nondeductible Commuting Mileage to a Business Deduction

The IRS does not allow you to deduct miles traveled between your home and your place of business. Such mileage is called commuting mileage and it is a nondeductible personal expense. This rule applies to self-employed people as well as employees of a business.

However, if you're self-employed and operate your business from a separate location away from your home, there is a loophole that will allow you to convert your miles traveled between your home and your business location. (You deduct car and truck expenses on Schedule C, line 9)

Here's the loophole:

To deduct transportation from your home to your place of business and back home, you must satisfy BOTH of the following:

You must be self-employed AND
Have at least two business locations

Any miles traveled between TWO or more BUSINESS locations are deductible business miles.

Here's the key:

Knowing what the IRS considers a "business location".

The IRS Considers the Following as Business Locations:

Your Home Office
A Location Outside Your Home

Home Office:

Your home office will qualify as a business location if it is used regularly and exclusively for business and not for personal purposes (i.e., no entertaining guests in this location).

Your home office may be a room in your house or designated space in an apartment or condo, such as your bedroom or living room, where you perform administrative duties, such as bookkeeping, billing, setting appointments, business planning, preparing reports, emailing clients, filing papers, etc.

TIP: If you don't currently have a home office in your house or apartment, set one up. All you need is a desk, chair, and file cabinet. Your cell phone could be your business phone.

If you have a house, use a separate room. If you rent an apartment, designate an area in your bedroom, kitchen, or living room to be used regularly and exclusively for business-related purposes.

If questioned by the IRS about whether you or your kids use the computer in your "office" to play games, answering "yes" may disqualify the space as a business location, and therefore, the cost of traveling between your home and your business may be disallowed.

A Location Outside Your Home.

Your other business location may be outside your home where you meet clients or customers to transact business.

For example, you may have a facility where you perform some type of service such as physical therapy, accounting, legal or paralegal services. Or, perhaps you have a retail store where you sell products or a restaurant where you serve customers.

Since your home office and your other business facility are two separate business locations, you satisfy rule #2:

You have at least two business locations

The first rule is:

You must be self-employed

CAUTION!

Technicalities you should be aware of:

Let's say you get up in the morning and dash out of the house to go to your place of business. You never bother to step foot into your home office to do any work before leaving the house (e.g., checking your emails or filing some papers or whatever).

Guess what?

Technically, the cost of traveling between your home and your business would not be deductible.

The reason:

Since you never stepped foot into your home office before leaving for work, you didn't actually travel between two business locations. Yes, I know; who would know. Nevertheless, those are the rules.

Remember the rule: You must travel between two or more business locations to get a deduction for the costs of such travel. Your home office is a business location, not the other rooms in your house!

In addition, you must comply with the regular and exclusive rule too, which you will if you use your office for adminstravtive work for your business (i.e. bookkeeping, preparing finanacial reports, making sales calls, filing paperwork, issuing invoices, etc.).

Your Home May Be Your Principal Place of Business in Two Ways

Besides simply having an office in your home and a separate location where you conduct your business, as previously discussed, your home may itself be your primary place of business, and therefore, travel from your home and back again for business-related purposes are deductible. For example, to pick up supplies for your business or to stop in on clients.

Mileage Deduction for Employees

If you're an employee and have two or more jobs, you may claim a mileage allowance for miles traveled between job locations only. The deduction is claimed as a miscellaneous itemized deduction on Schedule A and, when added to any other miscellaneous deductions, if any, is subject to the 2% adjusted gross income floor.

For example, if you work at two separate job locations, A and B, the miles traveled between locations A and B are deductible. However, miles traveled between your residence and locations A and B are nondeductible commuting mileage.

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