The Internal Revenue Service (IRS) has issued the 2020 optional standard mileage rates (Notice 2020-05). After having an increase last year, the IRS lowered the standard business mileage rate for 2020. Beginning on January 1, 2020, the standard mileage rates for business use of a car, van, pickup truck or panel truck will be 57.5 cents per mile (down one half of a cent from 2019).
The standard mileage rate for medical or moving purposes decreased three cents in 2020 to 17 cents per mile (20 cents per mile in 2019). The rate in service for charitable organizations remains unchanged at 14 cents per mile (currently fixed by Congress).
The optional standard mileage rates are used to calculate the deductible amount of business, moving, medical or charitable expense (miles driven times the applicable rate). If your car is for business and personal use, you’ll want to keep adequate records and subtract out personal miles. Mileage accumulated by driving to and from your primary workplace or office is excluded from the deduction.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Neither can taxpayers generally claim a deduction for moving expenses (For more details, see Rev. Proc. 2019-46). This would include unreimbursed mileage. Employers can reimburse employees for mileage at the standard mileage rate and are tax-free to the employee as long as accurate documentation is kept.*
To help pastors with mileage and other business expenses, churches should consider an accountable reimbursement plan to reimburse their pastor(s).
View the full IRS announcement here.
*The Board of Retirement does not provide legal, accounting, or tax advice. Consult your tax professional for tax consultation.