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Level 1
March 4, 2021
Question

Is it better to calculate actual expenses than mileage? I'm inputting mileage and it is taking forever.

  • March 4, 2021
  • 2 replies
  • 35 views
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2 replies

Level 15
March 4, 2021

Every person's tax situation is different so we can't say if one way is better or worse for you. It may be better in some years but some years you'll get a bigger deduction using the standard mileage rate. You're encouraged to do it both ways to see which is more beneficial but you don't have to.

 

Mileage is an allowable deduction if you’re self-employed or own your own business. You can choose between the standard mileage rate or the actual cost method where you keep track of what you paid for gas and maintenance.

 

Related Information:.

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Level 15
March 4, 2021

I don’t understand why it would take a long time to enter the standard mileage method, the only facts that are needed are the total business miles you drove for the year. You certainly don’t need to list every single trip. You need to have those records available in case of audit, but they are not reported on your tax return. Even if TurboTax allows entry of individual trips, only the final total is reported to the IRS. 

The IRS suggests that the standard mileage method is more generous for the majority of taxpayers, although that will depend individually on if it is a new car you are making payments on, and how much your insurance costs are.  For an older car, the standard rate will almost always be better because you can continue to take a depreciation allowance that is built-in to the standard mileage rate even after the car would normally have been fully depreciated using the actual expense method.