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The IRS recently increased the standard mileage rate employees can be reimbursed for using their personal vehicles for business purposes.

The new rate for 2011 is $.51 per mile. That is an increase of one penny over 2010′s rate of $.50. The IRS also set the mileage rate for medical and moving purposes at $.19 per mile and at $.14 per mile driven for service to a charitable organization. The new rates are effective January 1, 2011.

If you have contractors who are required to drive their personal vehicles as part of their contract assignments, they can be reimbursed for the miles they drive. FoxHire utilizes the standard mileage rate determined by the IRS.

If your contractor is working for a back-office that does not reimburse mileage, they can typically claim the reimbursement on their income tax return. But whether they are reimbursed by the back-office or claim reimbursement on their tax return, it is important that they track the dates they drive, the miles, and the destinations in order to back up their reimbursement requests.

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