The Internal Revenue Service has announced an increase in the optional standard mileage rates to use in 2004, as well as a paperwork-reducing provision for small businesses, including owner-operators.
Standard mileage rates are used when figuring the deductible costs of operating a car, van, pickup or panel truck for business, charitable, medical or moving expense purposes.
Business miles will increase to 37.5 cents from 36 cents per mile in 2003. Deductible medical or moving expenses will count as 14 cents per mile, up from 12 cents a mile in 2003. Providing services to a charity organization will remain at 14 cents per mile.
The IRS hiked the rate after research indicated that fuel prices had increased through the period ending June 30. The charitable standard mileage rate is set by law.
Taxpayers who use no more than four vehicles at the same time for business purposes may start using the standard mileage rate in 2004. Currently, taxpayers using more than one vehicle at a time cannot use the standard rate and instead must track actual expenses for each vehicle.
More information is available at the Internal Revenue Bulletin 2003-43, under Revenue Procedure 2003-76.
