Tuesday, August 5, 2008

The IRS Increases Company Reimbursement's

With gas prices on the rise, there are more people concerned with travel. For those who operate an automobile for business, charitable, medical, or moving expenses there is a benefit from the IRS to offset some of the pain at the pump (so to speak). Those that are truly affected by the higher costs of fuel will appreciate the recent news from the IRS in regards to increased reimbursement. The good news is that for individuals that use their car for business, there will be an increase to 58.5 cents a mile from July 1, 2008 through December 31, 2008. Previously the rate was 50.5 cent/mile for the first half of 2008. 05 Section 62(a)(2)(A) of the IRS manual states that allows an employee in determining the adjusted gross income, a deduction for the expenses allowed by Part VI (§ 161 and following),subchapter B, chapter 1 of the Code, paid or incurred by the employee in connection with the performance of services as an employee under a reimbursement or other expense allowance arrangement with a payor.
This increase of eight cent will I’m sure help generate a boost in travel for most companies. One can see the reflectance to travel over the past several months, with the higher fuel costs causing a vast effect on our economy. I commend the IRS on coming to the aid of taxpayers in this crucial economical strain. .
In recognizing the recent gasoline prices, the IRS has made this special adjustment for the final months of 2008. According to the IRS Commissioner Doug Shulman, the IRS wants the reimbursement rate to be fair to the taxpayer. Though gasoline is most important factor in the economical reimbursement there are other factors that enter into the calculation of mileage rates such as depreciation and insurance and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage
The new six month rate for computing deductible medical or moving expenses will also by eight cents to 27 cents a mile, for the next 6 months; this is up from 19 cents /mile. However the rate for providing services to charitable organizations will not change; this rate will stay 14 cents a mile.

According to the IRS, taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

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