If you’re a small business owner who drives a lot for work, then claiming a mileage deduction on your taxes is a great way to save money.
There are two options when you’re claiming a deduction for mileage. You can choose to claim a standard mileage deduction or you can calculate the actual costs of using your vehicle for business.
The IRS announced the 2017 standard milage rate as:
- 53.5 cents per mile for business miles driven, down from 54 cents for 2016
- 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
- 14 cents per mile driven in service of charitable organizations
Mileage deductions can be taken for business, charitable, medical and moving purposes.
There are two important factors to track if you want to use a mileage deduction. First, you need to track your actual miles. This is important so that you know how much you can deduct at tax time. Second, you need to track the reason for your trip.
Take John, for example, John is a real estate agent who drives his car to show houses. John tracks of how far he goes and what the purpose for the trip was. That way when it comes time to pay taxes John knows exactly how much he can deduct. John tracks the purpose of each trip as well. If the IRS ever audits John he has proof that the miles he claimed were for business purposes.
To help you out we’ve create a Free Mileage Log so that you can keep track of your miles. Grab our Mileage Log and keep it in your car so you can mark down each of your business trips.