Mileage Deduction Rules: Calculating Miles For Taxes

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Mileage Deduction Rules: Calculating Miles For Taxes

The mileage deduction is a great way to save on your tax bill. But there are some misconceptions about this valuable deduction. Let’s go over the mileage deduction rules, as well as some facts and myths about the mileage deduction.

Mileage Deduction Rules for Self Employed

There are a few key things you should know if you want to claim mileage on your taxes. The top ones are:

  • Your business, charity and medical drives are deductible
  • Your commute is never deductible
  • You must keep a mileage log of your trips
  • Self-employed workers generally benefit more from this than W2 employees.

For 2017, the IRS allows you to write off 53.5 cents per business mile. This offsets the cost of using a personal vehicle for business purposes.

Download MileIQ to start accurately tracking your miles »

Myth: You Need An Odometer Reading for Every Trip

Some believe you need to record your odometer reading for every business mileage trip. But, that’s not what the IRS requires. When you claim business mileage on taxes, you need total business mileage deduction, commuting and your personal mileage.

Fact: What The IRS Requires When Claiming

When claiming your deduction on IRS 1040 Schedule C, the IRS wants to know your total deduction amount. You’ll also have to provide the following answers:

  • Date you placed car into service for business purposes
  • Total business miles you drove during the year
  • Total commuting miles for the year
  • Total non-commuting, non-business miles for the year
  • Was your vehicle available for personal use during off-duty hours?
  • Do you (or your spouse) have another car for personal use?
  • Do you have evidence to support your deduction?
    • Is your evidence written?

Myth: You Can Estimate Your Mileage

You’d be surprised at how many people tell their tax pros their mileage is the “same as last year.” Or how many people will make an estimate on how much of their vehicle usage was for business reasons.

The IRS doesn’t allow estimates for the mileage deduction. There’s no wiggle room or leeway. If you’re ever audited and the IRS discovers your estimates, it can disallow the deduction and impose fees and penalties.

Fact: You Need To Back Up Your Deduction

You don’t need to submit your mileage log when you claim your deduction but you do need this documentation to back up the claim. If you ever face an IRS audit, you’ll be so thankful you have proof of your deduction.

According to the IRS, your mileage log for all business-related drives must include:

  • Time and date of the drive
  • Total distance of the drive
  • Places you drove for business (this does not require an exact address)
  • The business purpose for your trips.

Myth: You Can Only Deduct Business Miles

The majority of you will be deducting your business miles for a major break at tax time. But, there are other ways to get money out of your miles. Remember: unless you have a qualifying home office, your commute is never deductible.

Fact: Medical, Charity and Moving Miles Are Valuable

If you’re keeping track of all your miles, you may also be able to save at tax time. If you drive for charitable, medical or moving purposes, your miles may lead to a tax deduction. You can read more about those deduction rates here.

Myth: Only Self-Employed Workers Can Get a Mileage Deduction

The majority of people who take this deduction are self-employed or small business owners. But, if you are a W-2 employee who uses a personal car for work, you might be entitled to a tax deduction, too. If you receive a mileage reimbursement that doesn’t equal the standard mileage rate, you may claim a partial deduction.

Myth: Tracking Your Mileage Is Hard

This used to be true. Having to remember to log every mile was a tedious task. But thanks to mileage tracking apps like MileIQ, it’s easier than ever to maintain a compliant mileage log.

The best thing about mileage logging programs like MileIQ is that it not only gets you the largest deduction you deserve but it gives you time back. Those valuable hours could be used to grow your business or to play with your kids or to do whatever you’d like.

Download MileIQ to start accurately tracking your miles »

Marin Perez

Marin Perez

Marin has been writing about how technology improves lives for about a decade. He's excited to see how entrepreneurs are using tools like MileIQ to be more successful. When not working, he's thinking about his next trip.
Marin Perez

MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.