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How do I get a mileage deduction?

Mileage deductions can be difficult to understand when you’re recording your business expenses, but we can make it simple for you.

Actual Vs. Standard Mileage

In order to take any kind of deduction, the taxpayer is required to keep a written log of all miles driven and record how many were driven for business use and how many were driven for personal use. There are two options: actual auto expenses or the standard mileage deduction.

Since the standard mileage deduction is based on an average, in a large percentage of cases, using the mileage deduction produces a larger auto expense deduction than actual expenses. In order to use standard mileage, it must be used the first year the vehicle is placed in service.  After the first year, taxpayers can decide to use whichever method (actual or standard mileage) that has the highest amount of expense.

(Note: If the vehicle is leased, you must choose either standard or actual for the entire life of the lease.)

To get the actual auto expense deduction, the taxpayer must keep track of all maintenance, repairs, fuel, tires, insurance, registration fees, licenses, etc. and determine how much of that is attributable to the portion of the total miles driven that are business miles.

IRS 2014 Mileage Rates:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

IRS 2015 Mileage Rates:

  • 57.6 cents per mile for business miles driven
  • 23 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

To take advantage of this deduction; a taxpayer must keep track of:

  • All business miles driven for the year (in written form)
  • Total miles driven for the year (in written form)

When can you NOT use the standard mileage rate?

  • For commuting miles, which are the miles going from home to work and vice versa
  • If your car is for hire, for instance a taxi cab
  • If you use five or more cars at the same time for business, for instance a fleet operation
  • If you have already counted the depreciation of the vehicle as a deduction or allowance

Note: Parking fees and tolls for the business are separately deductible, regardless of which deduction method is used.