Federal Mileage Reimbursement

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What is the meaning of Federal Mileage Reimbursement? 

Federal mileage reimbursement refers to the amount that can be deducted from an individual’s federal income taxes for the costs of operating an automobile for qualified business, charitable, moving, or medical purposes. The amount of federal mileage reimbursement is based on the miles that a vehicle is driven for the aforementioned purposes. 

Is there another name for Federal Mileage Reimbursement? 

Yes, it is also often called the “standard mileage rate”.

How is the Federal Mileage Reimbursement rate set? 

The Internal Revenue Service (IRS) determines the federal mileage reimbursement rate. It is adjusted yearly and would depend on the study of fixed and variable costs of operating a vehicle for business use. On the other hand, the standard mileage rate for medical and moving purposes is based on variable costs like gas and oil. Finally, the standard mileage rate for a charitable purpose is according to law. 

The IRS uses cost data and analysis by Runzheimer International which is an independent research firm and business vehicle technology and solutions provider. Runzheimer International has been working with the IRS since 1980.  

For 2021, here are the standard mileage rates for the use of a car, van, pickup, or panel truck:

Are taxpayers required to use the IRS standard mileage rates? 

Even if the rate is set by the IRS, taxpayers are given the option to compute the amount for deduction using the IRS standard mileage rate or base it on actual expenses of driving their vehicle. They have to provide adequate records. 

What are some reminders on Federal Mileage Reimbursement? 

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