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Businesses can expect to pay more to reimburse their employees for work-related travel.The IRS recently issued its 2019 optional standard mileage rates that will be used to calculate deductible costs for employees to operate an automobile for business, medical, moving or charitable purposes.The rate for general business travel is increasing to 58 cents per mile, up 3.5 cents from the 2018 rate.Twenty cents per mile becomes the new rate for medical- or moving-related travel, an increase of 2 cents over 2018.These changes take effect Jan. 1.Mileage accrued in service of charitable organizations is not changing and will continue to be reimbursed at a rate of 14 cents per mile.Businesses are not required to reimburse employees for using personal vehicles for work purposes, but many companies view it as an important component of recruiting and retaining workers.Organizations that reimburse their employees for mileage typically do so at the IRS rate to keep those payments from being considered taxable income. Reimbursements above the IRS rate are considered taxable.An independent contractor conducts an annual study of the fixed and variable costs of operating an automobile help determine the IRS’ standard mileage rate for business travel. Rates for medical and moving purposes are based on the variable costs piece, the IRS says.Employees who file itemized tax returns can claim the remainder of the rate in cases where employers reimburse for mileage below the IRS rate.Individuals also have the option to calculate the actual cost of using their vehicle for work travel rather than using standard mileage rates for reimbursement.
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