You can use the mileage deduction to offset the cost of using a personal vehicle for business reasons. The standard mileage rate changes each year. It includes factors like gasoline prices, wear-and-tear and more. In 2019, you can claim 58 cents per business mile on your annual return.
There's no limit to the amount of mileage you can claim on your taxes. But, be sure to follow the rules and have a compliant mileage log.
Year Rate Per Mile Dates Covered 201958 cents1/01/19-12/31/19 201854.5 cents1/01/18-12/31/18 201753.5 cents1/01/17-12/31/17 201654 cents1/01/16-12/31/16 201557.5 cents1/01-15-12/31/15 201456 cents1/01/14-12/31/14 201356 cents1/01/13-12/31/13 201255.5 cents1/01/12-12/31/12 201151 cents1/01/11-12/31/11
The standard mileage rate is set by the IRS every year and this is the deductible rate for your drives.
You can claim mileage on your tax return if you kept diligent track of your drives throughout the year. In 2019, you can write off 58 cents for every business mile. You have two options for deducting your vehicle expenses: the standard mileage rate or the actual expense method.
With the standard mileage rate, you take the deduction of a specified number of cents for every business mile you drive. Multiply your business miles by that year's standard mileage rate for your deduction
Example: Ed, an independent salesperson, drove his car 20,000 miles for business during 2019. To determine his mileage deduction, he should:
With the mileage deduction, the IRS only lets you deduct trips that are for business. Here are the drives the IRS considers to be business:
Generally, you cannot deduct mileage to and from work. The IRS defines the first trip from your house and the last drive back as a non-deductible commute. This is true even if your commute is far. The IRS considers where you live a personal choice and, thus, a personal expense.
Working during a commuting trip is still considered commuting. This includes making business calls, listening to work-related tapes or having business discussions.
One way to avoid the harsh commuting rule is to have a qualifying home office. With this, you can take a mileage deduction for any trips you make from your home office to another business location. Make sure you're following the rules about a home office, though.
If you're using the standard mileage rate, first calculate the value of your deduction. You can also add your business parking costs and toll expenses. You'll also need to tally up your total commute miles and personal (non-commute) miles for the year.
When you're filling out your Schedule C, you can input your mileage deduction on Line 9. Put your mileage totals on Part IV, Line 44.
The IRS will also want to know your starting odometer reading, your commuting miles and your personal, non-commuting miles. If you're a W2 employee, there are scenarios where you can still write off business miles. You can learn more about that in this article about mileage reimbursements.
It's important to note the difference between mileage reimbursement and mileage deduction. A reimbursement is when an employer or client pays you a specific rate for the miles you drive. Mileage deduction is when you take a write-off for the miles you drove on your annual tax return.
The IRS doesn't require employers or clients to reimburse you for mileage. Many do to maintain and attract workers, but there's no mandated federal mileage rate for non-governmental employees.
There is no limit to the miles you can claim on your taxes; you can claim as many miles as you can substantiate. With that said, some claims raise a red flag with the IRS, including:
Yes, you can deduct business-related parking and toll costs on your taxes. Just make sure you keep compliant records.
The standard mileage rate includes a lot of the costs related to your vehicle, but it doesn't cover all expenses. If you use the standard mileage rate, you can deduct the following vehicle-related expenses:
The huge advantage of the standard mileage rate is that it requires less record keeping. You do need to keep track of:
Yet, keeping an accurate mileage log can be tedious. The IRS requires those logs to be reasonably detailed. You can also use a mileage tracking app like MileIQ to make the process easy and ensure you're in compliance.
There are some important restrictions on who can use the standard mileage rate. If you don't qualify to use it, you must use the more complicated actual expense method.
You must use the standard mileage rate the first year you use a car for business. If you fail to do so, you are forever stuck using that method for that car. You can switch between the modes but only if you use the standard mileage rate the first year.
It's a good idea to use the standard mileage rate the first year you use the car for business.
If you choose the standard mileage rate method, you cannot deduct actual car operating expenses. All of these items, as well as depreciation, are factored into the standard mileage rate set by the IRS.
However, you can deduct interest paid on a car loan, as well as parking fees and tolls for business trips. You can't deduct parking ticket fines or the cost of parking your car at your place of work.