Tax Tips Logo ImageISSUE:

The Internal Revenue Service has released the standard mileage rates for the coming year.

SITUATION:

Idaho Theological Seminary (ITS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are not required to file Form 990 annually.

ITS’ Controller called to ask a common, yearly question for this time of year:

“Has the IRS published the 2021 standard mileage rates yet?”

“As a matter of fact, yes they have,” we answered.  “The rates are as follows:

  • 56 cents per mile for business purposes
  • 16 cents per mile for medical purposes (the moving expenses deduction is not available for 2021)
  • 14 cents per mile for charitable purposes (set by statute, thus does not change annually)

 

RULES:                                                                        .

From IRS Notice 2021-02:

IRS released optional standard mileage rates for 2021, determined in accord with Rev. Proc. 2019-46,2019-49 IRB 130. IRS provided rates to be used in determining deductible costs of operating auto for business (56¢ per mile), charitable (14¢ per mile), or medical/moving (16¢ per mile for either) expense purposes in 2021, as well as amount to be used in calculating reductions to basis for depreciation taken under business standard mileage rate. However, IRS also reminds taxpayers that after suspension of miscellaneous itemized deductions in TCJA ’17 Sec. 11045, PL 115-97, 12/22/2017 for tax years beginning after 2017, this standard rate can’t be used to deduct unreimbursed employee travel expenses. TCJA ’17 also suspended deduction for moving expenses, except as permitted under Code Sec. 217(g); . For purposes of computing allowance under fixed and variable rate allowance plan, standard automobile cost may not exceed $51,100 for cars, trucks, and vans. Notice 2020-5, 2020-4 IRB 380 is superseded.

 

BOTTOM LINE:

  • The business and medical rates dropped slightly from the 2020 amounts.
  • The deduction for moving expenses is currently suspended (except for some members of the U.S. Military).
  • Due to the suspension of the deductibility of miscellaneous itemized deductions (Form 1040, Schedule A), the rate for business purposes may not be used to deduct unreimbursed employee travel expenses for 2021.
  • It would be a good idea for institutions to update their policies and procedures to reflect the 2021 amounts.

 

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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