IRS Announces Recommended Mileage Rates for 2012
What church leaders should note heading into the new year.

On Saturday, the Internal Revenue Service announced its recommended optional standard business mileage rates for 2012. These recommendations are ones "employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes," the IRS says.

Many church treasurers also use these recommended rates to reimburse business miles logged by pastors, staff members, and volunteers for the use of their personal vehicles to drive hundreds of miles each month for visitations, home visits, retreats, community meetings, and conferences, among other things.

Beginning January 1, 2012, the IRS says the 2012 standard mileage rate remains at 55.5 cents per mile for business uses, is reduced to 23 cents per mile for medical and moving uses, and remains at 14 cents per mile for charitable uses.

Moving forward, it's important for church treasurers to periodically check for updates on the rates from the IRS. For instance, in June, the IRS increased the standard mileage rate from 51 cents per mile to 55.5 cents per mile for the second half of 2011 to address increased gas prices around the country.

In the February 2012 edition of Church Finance Today, Richard Hammar sheds more light on mileage rates, including a more expansive review of the best practices regarding reimbursements for vehicle uses by church staff.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations

Comments

Displaying 1–5 of 5 comments

David

December 27, 2011  8:24pm

Thank you, that is very helpful.

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Matt

December 27, 2011  1:07pm

Friends, Thanks for raising these questions. Rich Hammar addresses mileage-related questions in the 2012 Church & Clergy Tax Guide; he also covers the topic in the upcoming February edition of Church Finance Today (both available through YourChurchResources.com). From the upcoming February CFT: "Each year the IRS announces a new "standard business mileage rate" that can be used by taxpayers to compute a deduction for the business use of a vehicle. This rate also can be used by employers to reimburse workers' substantiated business miles under an accountable expense reimbursement arrangement. The standard mileage rate is an important concept for church treasurers, since many churches reimburse staff members' business miles using this rate ... Many churches have adopted an accountable reimbursement arrangement that uses a mileage rate to reimburse business miles driven by employees. Some churches use the IRS approved rate, while others use a rate that is either more than or less than the IRS rate." In order for a reimbursement of up to 55.5 cents per mile to qualify as an "accountable reimbursement arrangement," the church must require its pastors and employees to properly document their transportation expenses, such as the business purpose of each trip, distance traveled (including total miles and odometer reading), and date of travel, and submit the expenses to the church treasurer within 60 days of when they occur. Under this scenario, the church does not have to report the reimbursement as taxable income on the employee's W-2. If a church chooses to reimburse below the 55.5 cents per mile, that's fine; the employee then has the ability to submit the difference (55.5 cents minus the church's rate, multiplied by the number of miles traveled) as a business expense deduction (again, if the travel is properly documented). If a church chooses to reimburse above the 55.5 cents per mile, that's also fine, but the difference (the church's rate minus 55.5 cents, multiplied by the number of miles traveled) must be counted as taxable income on the employee's W-2. Regarding the 14 cents per mile, Rich says: "The "charitable" standard mileage rate, which can be used to compute a charitable contribution deduction for unreimbursed miles driven while performing services on behalf of a church or other charity, remains at 14 cents per mile for 2012. The charitable mileage rate is set by statute, not the IRS, and so it is not adjusted each year." For further details and explanation, I highly recommend the 2012 Church & Clergy Tax Guide, as well as the upcoming Church Finance Today. I pray this helps. Matt

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Michelle

December 27, 2011  12:24pm

I'd like clarification too. Our church has been paying .45 since I started here 3 yrs ago, so I'd like to know if its something that needs to be addressed by the Finance Team or Elders.

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Debora

December 27, 2011  7:59am

Ditto for David's comment on 12/25. Can you use the 55.5 rate for a non-compensated officer of a non-profit to reimburse for their travel expenses involved in the work of the non-profit?

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David

December 25, 2011  12:19pm

Hi, thanks for the article. However, the article isn't very clear which mileage rate churches should use. You say church treasurers need to check for updates since the standard rate went from 51 to 55.5 cents but then you mention that for charitable uses, it is 14 cents. So, which is it?

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