Review the recently released cost-of-living adjustments (COLA) as released by the Internal Revenue Service, taking effect January 1, 2021. ...
Just as the never-ending year of 2020 was concluding, the IRS released the updated standard mileage rates for 2021. The rates for the use of a vehicle (including cars, pickups, vans, or panel trucks) had a small downturn from the 2020 rates.
The new standard mileage rates starting on January 1, 2021, are as follows:
The rate for business use is updated each year based on an annual study of fixed and variable costs of operating an automobile. These costs include, but are not limited to, depreciation, insurance, repairs, tires, maintenance, gas, and oil prices. The rate for medical and moving purposes is only based on variable costs for operating.
As a reminder of the rules under the Tax Cuts and Jobs Act (TCJA), any unreimbursed travel expenses are no longer allowed to be claimed as miscellaneous itemized deductions for individual taxpayers. The TCJA also disallowed the deduction of moving expenses, excluding armed forces on active duty with orders of permanent change. Both rules will continue to be in place through the beginning of 2026.
Along with the Tax Cuts and Jobs Act changes, it should also be noted that no business mileage is allowed when using the Modified Accelerated Cost Recovery System (MACRS) or when a 179 deduction was used. Taxpayers continue to be limited on the number of vehicles (no more than four) that can be applied using the standard rate at one time. Individuals can also use their actual allowable expenses instead of the standard rates given they have kept the appropriate records for evidence.
If any questions arise when implementing these mileage rates or adjustments, please reach out to your local Schneider Downs tax professional.
Review the recently released cost-of-living adjustments (COLA) as released by the Internal Revenue Service, taking effect January 1, 2021. ...
Learn more about the significant changes to PPP Loans as a result of the American Rescue Plan Act signed into law on March 11, 2021. ...
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