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Deductible Vehicle Expenses
Auto Mileage Rates For 2003
Due to the slightly lower fuel prices as of June
30, IRS has announced the standard rate for business miles will be 36.0 cents
for 2003. This is a half cent decrease from the 36.5 cents for 2002 business
miles. Companies that base their employee reimbursements on the IRS rate have
plenty of time to make the necessary changes.
In all of my almost 27 years in the tax business, this is the earliest I have
seen
IRS release their official mileage rates. It wasn't long ago that they were
announcing their standard rates in late December or early January, causing a mad
panic for everyone who uses that rate for such things as official reimbursement
plans.
I don't mean to be a nitpicker here, but I'm not so sure that calculating the
official deductible cost of operating a vehicle this early is realistic,
especially in these uncertain times with the Middle East. The largest changes in
the IRS rates have been caused by changes in the price of fuels. If a big war
starts up in Iraq or other oil producing countries, and the price of gas
skyrockets, IRS will either have to raise the official rate or people will need
to use their actual expenses when calculating their vehicle deductions.
Of course, if there is a huge change in the price of fuels, we will probably see
IRS issue a mid-year change in the rate, as they did in 1999, where it was 32.5
cents per mile from 1/1/99 through 3/31/99 and 31.0 cents per mile from 4/1/99
through 12/31/99. That makes taxes & accounting for vehicle expenses even
messier than it normally is.
Likewise, there will be changes in some of the other IRS mileage deductions.
The standard mileage rate for use of a car for medical reasons will be 12 cents
a mile. The 2002 rate is 13 cents a mile.
The standard mileage rate to use when computing deductible moving expenses will
be 12 cents a mile. The 2002 rate is 13 cents a mile.
The standard mileage rate for the use of a car when providing services for a
charitable organization remains at 14 cents a mile.
Again, this just illustrates the immense intellect of the IRS head honchos. They
have been able to determine through their extensive research that vehicles cost
less to operate for these other purposes than for business. This is quite
different from the operating costs calculated by such unbiased sources as Hertz,
who issue annual press releases claiming that it costs well over a dollar per
mile to operate a car. Since my formal education in this area consists of
nothing more than Auto Shop in high school, where we never covered this aspect
of auto science, I have to trust the IRS brainiacs to steer us in the right
direction.
KMK
This page was updated:
Saturday, September 21, 2002 01:42 PM
Ozarks Time by KMK
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