New IRS mileage rates

The IRS has just announced new mileage rates that take effect January 1, 2005:

A. Taxpayers may deduct 15 cents per mile for miles driven to receive medical services or for moving to take a new job. This is up from 14 cents in 2004. These miles are not reimbursable to a church staff person from a professional expense allowance, although this may be reimbursed to a new employee from a moving allowance.

B. For volunteer services on behalf of a charitable organization, taxpayers may deduct 14 cents per mile, which is the same as for 2004. Church members may itemize this deduction for miles driven as members of committees or to attend religious or denominational events where they are volunteering. It is not clear that simply attending a worship service qualifies one for this deduction, as presumably there are other benefits derived from doing so.

C. For business purposes, taxpayers may deduct 40.5 cents per mile, up from 37.5 for 2004. This is what you have been waiting for.

The latter figure of 40.5 cents per mile is what employers should reimburse employees who use their personal cars on company business, and is the amount that congregation should reimburse ministers and other church staff from their professional expense allowances.

The increase from 37.5 to 40.5 cents per mile is in recognition of higher gasoline costs as well as increases in auto insurance rates.

In actuality, the true cost of operating an average automobile in the US is well over 60 cents per mile, and staff using their own cars for church business should claim reimbursement at the 40.5 cents per mile rate the IRS allows.

Ministers using a church-owned or leased automobile for personal business should reimburse the church 40.5 cents for each mile driven that is not related to the performance of one's duties.

Again, this takes effect January 1, 2005.

¶ 5/5/2005