As of January 1, 2009, the IRS has adjusted the standard mileage allowances for use of a car in travel to 55 cents per mile for business travel, and 24 cents per mile for moving expenses. The rates declined slightly from those in use for the second half of 2008, due to lower gasoline prices.
Worldwide ERC® Tax Counsel, Peter K. Scott notes that “Each year, the IRS publishes optional standard mileage rates, establishing the amounts deductible for use of an automobile in business and for other purposes, such as moving. In 2008, when fuel costs rose dramatically, the IRS announced an unusual mid-year increase to the standard rates."
If an employee uses his or her automobile in a move that qualifies under IRS Code §217, he or she may either deduct the actual out-of-pocket expenses, such as gas, oil, repairs, parking, and toll fees but not depreciation, maintenance, or insurance, or take the current standard deduction (27 cents per mile as of July 1, 2008), plus parking and toll fees. Business travel expense deductions also may be computed based on actual expenditures (including depreciation, etc.) or on a standard rate (58.5 cents per mile as of July 1, 2008). Scott said, “Those rates will be replaced by the new ones as of January 1, 2009.”
Scott also noted that an employee cannot deduct moving expenses using the business travel rate (Adamson v. Commissioner, 32 T.C.M. 484 (1973)). If the employer reimburses the employee at the business rate, the difference between the reimbursement and the amount the employee is permitted to deduct at the moving expense rate would constitute income to the employee, subject to withholding, employment tax, and reporting on the Form W-2.
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Worldwide ERC® is the recognized industry authority on relocation and international assignments in the U.S. and major global traffic areas. Worldwide ERC® provides leadership, advocacy, education and networking to global workforce mobility professionals and stakeholders through specialized training, credentialing, meeting events and information exchange. Worldwide ERC® is headquartered in the Washington, DC metropolitan area, with offices in Brussels, Belgium and Shanghai, China. Contact Worldwide ERC® at +1 703 842 3400, or visit www.WorldwideERC.org.