You can record business mileage in one of two ways - using actual expenses or the standard deduction rate. Actual expenses that may be included are listed in this article. To deduct business mileage, multiply the actual business miles driven by the IRS standard mileage rate for the tax year. Note that you can only deduct business mileage, not personal mileage.
Whether you use the standard mileage deduction or actual mileage, you want to select the method that will provide you with the highest tax benefit. The answer to this question depends on several variables, including the number of miles driven and whether you have both personal and business vehicles. The most important variable is the number of miles driven for business during the year.
Once you have determined your business mileage, you must record it on your tax return. You will need to gather information on the use of your vehicle for business purposes. Depending on how you record mileage - using the IRS standard deduction, or actual miles - you will need specific information, as described in this article.
This article contains information on the IRS standard mileage rate, updated for the current tax year. The rate is for the year of your tax return, not the year when you prepare the return. For example, you will be preparing your business tax return in early 2016 for the 2015 tax year, so use the 2015 tax rate.
CPA Gail Rosen answers frequently asked questions about business travel mileage. Including:
- Conmuting miles: Commuting miles are considered personal driving and are not deductible.
- Mileage as advertising. If you drive a car with advertising on it, the expenses for driving the car are not considered as a business expense. (But the cost of putting the logo on the car is an advertising expense.)
- Mileage from a home based business. If you work from home, miles you drive from home to business locations is deductible as a business expense.
- Deducting mileage for a non-company car. You can deduct business miles driven in any car, as long as you keep good at-the-time records.
Read more about business auto expenses.
5 Frequently Asked Questions about Business Mileage Calculations
Deducting Use of Car for Business Purposes
Whether you have a car that has been purchased by your business, or you are using your personal vehicle for business purposes, you need to know how to calculate mileage for business use of your vehicle.