They say, there are only two inevitable things in life - death and taxation. While there is no escape from the former, the impact of the latter can be mitigated through tax deductions, which you can claim for certain expenses and investments. In the USA, the rules regarding taxation are handled by the Internal Revenue Service (IRS) and each year it publishes notifications regarding changes in the tax structure.
You are taxed on the basis of every penny you have earned in a year. The IRS sees to it that every one of your business or personal income sources is tracked and accounted for. There is no way you can completely escape from taxation, but you can certainly lessen the burden by making investment and claiming tax deductions.
Mileage Rates & Tax Deduction
IRS offers tax deductions for business, medical, charity and even moving related travel. Personal travel related expenses are not tax deductible. To apply for such a deduction, you need to have an accurate record of the amount of miles you have actually traveled. Either you can provide an estimate of total travel expenses in the form of fuel bills or you can claim the deductions on the basis of mileage rates provided by IRS. It specifies the deduction provided per mile for business, charity, medical or moving related travel.
If you have already claimed business travel related deductions under 'Modified Accelerated Cost Recovery System (MACRS)', you are not eligible for mileage rate based deduction. Also, if you have already claimed deduction under section 179 for a vehicle, you are no longer eligible for this travel related tax deduction. Check with a qualified tax consultant for more details regarding IRS mileage reimbursement rules.
New Rates
After that brief overview of rule related to travel related tax reductions, let me provide you with information about the new rates. According to the latest circular issued by the IRA, with effect from January 1, 2012, following will be the rates which you must note.
For Business Travel
For every mile of business related travel, you can claim reimbursement at the rate of 55.5 cents per mile in 2012. So a business can expect to gain a marginally greater benefit through travel related tax deductions.
For Charity Related Travel
For any kind of charity related travel, the rate for 2012 remains the same as that in 2011. For every mile of charity related travel, you can claim a tax deduction of 14 cents.
For Medical / Moving Related Travel
For every mile of medical or moving related travel, you can claim 23 cents of tax deduction in the current year.
For more details related to travel related tax deductions, the best source of information is the IRS website itself. You will find detailed information regarding any aspect of taxation on this website. Note down the above new rates for business, charity, medical or moving related travel, to get an accurate estimate of the amount of deductions you can claim for.
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