The Internal Revenue Service provides tax filers with two methods of claiming expenses associated with the use of an automobile as a tax deduction. The actual expense method allows for the deduction of gas, insurance, license fees, tags and toll charges adjusted by the percentage of total vehicle miles traveled for business purposes. By contrast, the standard mileage deduction assigns a value, known as the standard mileage rate, to each mile traveled. The IRS adjusts the standard mileage rate occasionally to reflect changes in the variable and fixed costs of operating an automobile. Mileage can be deducted at different standard rates depending on whether the miles were used for business, for charitable activities, or to access medical treatments.
Mileage Claims As an Employee
1. Keep a mileage logbook for each automobile you might use for deductible driving purposes. Record each trip, noting which miles were for personal travel and which were for business, charitable or medical travel, in the logbook along with a detailed journal about the trip. List both the beginning and ending odometer readings for the trip as well as the total miles driven.
2. Add up the miles driven for business purposes during the tax year.
3. Fill out Form 2106, Employee Business Expenses. List vehicle expenses in Part II. This section allows you to calculate your standard mileage rate deduction from lines 11 through 22.
4. Transfer the total from Form 2106 to Schedule A, Itemized Deductions. Mileage deductions are added to Line 21, "Unreimbursed employee expenses." Totals from Schedule A then transfer to Form 1040, U.S. Individual Income Tax Return.
Mileage Claims for the Self-Employed
1. Calculate the total number of miles driven for business purposes during the tax filing year.
2. Multiply the miles driven by the current standard mileage rate published in the instruction booklet for Schedule C. Report this total on Line 9, Car and truck expenses to claim the mileage deduction.
3. Fill out Part IV of Schedule C, Information on Your Vehicle. This section provides additional information for substantiating your mileage deduction to the IRS.
- As of January 2012, the IRS allowed a 55.5 cent deduction for business miles driven, 23 cents for miles driven for medical purposes or for moving, and a deduction of 14 cents for miles driven in charitable service. Miles drive for medical purposes are lumped in with other medical expenses, which are only deductible to the extent that they exceed 7.5 percent of adjusted gross income. Always check IRS publication 463 for the latest mileage deduction information to ensure you are claiming a deduction for the proper amount.
- You are only allowed to claim miles that directly relate to a specific business purpose if you are claiming the business mileage deduction, but you can't claim mileage for routine driving. For example, you cannot claim the miles for your commute from your home to your office.
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