2020 Standard Mileage Rates Announced for Business, Charitable, Medical, and Moving Purposes
The Internal Revenue Service as of late gave the 2020 discretionary standard mileage rates.
Those costs, which shift every year to make up for fuel cost expansion, vehicle cost and support, and increments in protection rates, will again influence the manner in which a business repays its versatile personnel. In particular, the IRS mileage rate is a rule that organizations use to ascertain the deductible expenses of working a vehicle for business, beneficent, restorative, or moving purposes. Beyond announcing the rate change, we have a few reminders and tips surrounding this reimbursement allowance.
As of January 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:
- 57.5 cents per mile for business miles driven, down from 58 cents from 2019
- 17 cents per mile driven for medical or moving purposes, down from 20 cents from 2019
- 14 cents per mile driven in service of charitable organizations; the mileage rate for service to a charitable organization is not alterable by the IRS. Instead, it must be changed by a Congress -passed statute.
Have you considered…
- Under the Tax Cuts and Jobs Act, workers are not allowed to write-off unreimbursed business mileage. In the event that your organization doesn’t compensate for this repayment, it could confront lawful outcomes.
- A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.
- Taxpayers likewise have the alternative of ascertaining the genuine expenses of utilizing their vehicle as opposed to utilizing the standard mileage rates. The actual expense method often produces a significantly different result. You will need to speak with your CPA to figure out which technique yields the larger deduction.
The IRS rate was intended to function as a reimbursement cap. Today, the rate holds companies accountable, but it does not account for fluctuations in vehicle prices across city, county, and state lines. For businesses whose employees use their vehicles for work, there is an alternative to the standard mileage rate. The Fixed and Variable Rate (FAVR) allowance preserves reimbursement equity and helps businesses avoid over- or underpayment to employees. To find out more about this IRS recommended reimbursement methodology or if you have any questions about the IRS Standard Mileage Rate, please contact one of our professionals today.