To choose between taking actual vehicle expenses or the standard mileage deduction for self-employed businesses, you will need to figure out the actual expenses and compare them to the standard mileage amount per mile to see which gives you the best tax outcome. This means you need to have the receipts/totals for everything that you spent on the car for the year. Gas, oil, windshield wipers, repairs, tires, filters, etc. You would then take the total miles you drove for business and divide that by the total miles driven overall. That will give you a percentage of business use for your vehicle. The expense amount that's attributable to your business will be calculated using that percentage (total expenses x business use % = $business car expense amount allowed)
Using the standard mileage deduction is much simpler since you just multiply your business miles by the standard mileage rate for the year (for 2024 it's .67 a mile, which is up 1.5 cents from 2023).
IN GENERAL:
- If your vehicle needs lots of repairs, you may benefit from taking actual expenses
- If your area in the US has lower gas prices than the national average, you may benefit from taking the standard mileage deduction
- If you are guessing at miles and costs of expenses, use standard mileage. We only report what is true and correct.
- If you are not so good at keeping records, use standard mileage.
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