The standard mileage rate, which employers may use to reimburse employees who drive their own cars on business, remains 55.5 cents a mile for 2012.
You can also use the standard mileage rate to value employees? personal use of moderately priced company cars. What?s moderately priced? The IRS has yet to release the 2012 amounts, but for 2011, the amounts were $15,300 for cars and $16,200 for SUVs. (Notice 2012-1, IRB 2012-1)
Road trip. For employees who drive their own cars on business, the 55.5-cents-a-mile rate is a ceiling; you can use a lower per-mile reimbursement rate. Snag: Employees can deduct the difference between the IRS rate and your lower rate, but they?ll have to attach Form 2106 to their 1040s next year to do so.
Reimbursements up to 55.5 cents a mile are tax-free, provided employees keep track of their business miles, where they drove, who they saw and the business they conducted. (GPS devices, PDAs or smartphones equipped with a mileage tracking app that are backed up to a server make tracking miles easier, but don?t ditch the paper-and-pen method, just in case.)
What?s taxable: reimbursements exceeding 55.5 cents a mile, amounts employees don?t return and amounts paid for miles for which employees don?t keep adequate records.
Tax stop. For income tax withholding purposes, the standard mileage rate may be used to value employees? personal use of company vehicles. But if a vehicle isn?t moderately priced, you must use the general valuation method or lease valuation method to value personal miles.
Source: http://www.businessmanagementdaily.com/29624/start-your-engines-mileage-rate-at-555-cents-a-mile
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