Have you ever used your car for business purposes? You can probably deduct some of the expense on your tax return!
There are two methods for deducting auto expenses.
Method 1: Actual expenses (gas, repairs, maintenance, etc)
Method 2: Standard mileage deduction (see below)
Today, we’re going to focus on the 2nd method and how it applies to self-employed entrepreneurs.
First off, if you want to use the standard mileage deduction, you must use it in the first year the car is used in the business. If you use actual expenses in the first year, you can’t use the standard mileage deduction in the 2nd year.
If your main place of business is your home office, you can deduct the mileage from your home to your clients. Just be sure to record each and every trip. I suggest keeping a log of your miles using MileIQ. Each trip you will need to record the following pieces of information:
- Date of trip
- Purpose of trip
- Starting and ending location
- Total miles (round trip)
How much is the standard mileage deduction in 2018?
Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) is:
- 54.5 cents for every mile of business travel driven
- 18 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
These pennies add up fast over the course of a year, so grab MileIQ and start tracking today!
Resource: IRS Publication 463