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Calculating Mileage Expenses for Business

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How to Calculate Mileage for Business

What You May Deduct
You may deduct expenses related to your use of a car or truck for business purposes, using one of two methods to calculate mileage and other expenses. You can calculate mileage expense in one of of two acceptable ways:

  • Standard Mileage
    Under this method, you take the current standard mileage deduction determined by the IRS and multiply it by the number of miles you drive for business purposes.

  • Actual Costs
    Under this method, you keep track of all costs associated with business use of your car/truck. You will need to establish a percentage use of the vehicle for this method. For example, let's say you have determined that your actual costs for the year for use of your car/truck total $15,000. Multiply this by the percentage of usage for business; say, 50%. So, you can deduct $7,500 in actual costs for business use of your car.

What You May NOT Deduct as Car/Truck Expenses
You may not deduct car/truck expenses for personal use. Note that commuting back and forth to your business, even in your car or truck, is not considered a business use.

Special Notes:
For both methods described above, you MUST keep excellent records to substantiate your deductions. For every trip, you need to have a record of:

  • Date of the trip
  • Reason for the trip, including who you are seeing and for what purpose.
  • For the standard mileage, you must also keep track of miles driven.

For More Information
IRS Form 463 has more information on this topic.

Disclaimer
This article presents general information; I am not a tax attorney or tax preparation specialist. Refer to IRS publications and refer questions to your tax consultant.

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