What is the mileage deduction and do I qualify?
What is the mileage deduction?
If you use your vehicle for business purposes, you may qualify for the mileage deduction. If you itemize deductions, you may also claim miles you drive for certain medical and charitable trips that you write down.
If you qualify for business use of a vehicle, you can choose to take either the standard mileage rates or to calculate the actual cost of using your vehicle. In order to use the standard mileage rate, however, you must choose this method the first year your vehicle is used for business and keep a log of each trip and the miles driven. Then, in later years, you can choose to use either the standard mileage or actual cost method.
Note: If you lease your vehicle and decide on the standard mileage rate, you must use this method for the entire length of the lease.
Basically, if you use your vehicle solely for business purposes, you may deduct the entire cost of its operation with some limits. However, if you use your vehicle for both business and personal purposes, you may only deduct the cost of its business use. TurboTax will ask questions to figure out how much of your vehicle costs can be deducted for your business.
The standard mileage rate is set by the IRS. The cents per mile driven you can deduct on your federal tax return is:
|Miles Driven for:||
cents per mile
cents per mile
|Medical or Moving||23.5||23|
In order to take the standard mileage deduction, you must meet the following requirements:
- You must not operate five or more cars at the same time, as in a fleet operation
- You must not have claimed a depreciation deduction for the car using any method other than straight-line
- You must not have claimed a Section 179 deduction on the car
- You must not have claimed the special depreciation allowance on the car
- You must not have claimed actual expenses after 1997 for a car you leased
- You cannot be a rural mail carrier who received a "qualified reimbursement"
To use the actual expense method, you must determine what it actually costs to operate your vehicle for the portion of the overall use that is business use. You can include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are business miles.
You will need to keep adequate records of these expenses or be able to provide sufficient evidence to their validity.
For information about depreciation - a complex topic - please click here.