The Internal Revenue Service recently modified and updated the rules for using optional standard mileage rates to calculate the deductible costs of operating an auto for business, charitable, medical, or moving purposes. The new rules, outlined in Revenue Procedure 2019-46, have been updated to reflect changes in federal income tax law that were made by the Tax Cuts and Jobs Act (TCJA).
For example, taxpayers may not use the business standard mileage rate to claim a miscellaneous itemized deduction for calendar tax years 2018–2025. The TCJA suspended the miscellaneous itemized deduction during this period for most employees with unreimbursed business expenses, including the costs of operating an automobile for business purposes (some exceptions apply for self-employed individuals and certain employees, including Armed Forces reservists and qualifying government officials.)
The TCJA also suspended the deduction for moving expenses. However, this suspension does not apply to a member of the Armed Forces on active duty who moves pursuant to a military order and incident to a permanent change of station.
The guidance also provides rules to substantiate the amount of an employee’s ordinary and necessary travel expenses reimbursed by an employer using the optional standard mileage rates. Taxpayers are not required to use a method described in this revenue procedure and may, instead, substantiate actual allowable expenses provided they maintain adequate records.
The updated Revenue Procedure is effective for:
- Deductible transportation expenses paid or incurred on or after November 14, 2019,
- Mileage allowances or reimbursements paid to an employee or a charitable volunteer on or after that same date, and
- Mileage allowances or reimbursements for transportation expenses the employee or charitable volunteer pays or incurs on or after that same date.