Salespeople can put in a lot of time driving from client to client to show merchandise and deliver product. In many cases, this drive time runs up the miles on their own vehicles, which means more frequent servicing. Companies will typically reimburse the salesperson for the miles driven while working, but even if the company doesn’t, the Internal Revenue Service allows taxpayers to deduct the cost of driving for work.
Standard and Actual
The IRS allows taxpayers to choose how they want to deduct their business driving costs. You can choose to deduct the actual costs associated with business driving. This involves dividing how many business miles you drove in the year versus how many total miles and multiplying your actual driving expenses by that percentage. The other option is to simply multiply your business miles by the standard mileage rate as determined by the IRS each year. Many people calculate the deduction both ways in order to see which one gives them the larger deduction.
Standard Mileage Rate Method
The standard mileage rate can be used for either an owned or leased vehicle used for business purposes. To use this rate for an owned car, you need to use the standard mileage rate during the first year a car is used in business. You can choose either method in the following years. If you want to use the standard rate for a leased vehicle, you must use the same method for the entire lease period.
You will need to keep a mileage log of the odometer readings during the time when you are working. List the starting reading and the ending odometer reading when you stop driving the car for work purposes. If you regularly report to an office before making business stops during the day, then your business miles begin at the office and do not include mileage to and from your home.
When You Can't Use the Standard Rate
You cannot deduct driving costs if you are using a company vehicle and the company is paying the costs to use it. If the company reimburses you for your business mileage on your personal vehicle, but it is less than the IRS standard mileage rate, you can still multiply your business miles by the difference between the standard mileage rate and the rate that your company reimburses you.
Mileage Rates for 2011
When preparing taxes for 2011, the IRS has set the standard mileage rate as 51 cents per business mile, which is a 1-cent increase over 2010. The increase over previous years is due to the high cost of gasoline in 2011. Other mileage rates for 2011 are 19 cents per mile for miles driven for medical or moving purposes and 14 cents per mile for miles driven while helping charitable organizations. The standard mileage rate is based on the results of an annual study of the costs, fixed and variable, of operating a car.
- IRS: Publication 535 -- Introductory Material
- IRS: Transportation
- Internal Revenue Service. "IRS issues standard mileage rates for 2020." Accessed Feb. 3, 2020.
- Internal Revenue Service. "Standard Mileage Rates." Accessed Feb. 3, 2020.
- Cision PR Newswire. "Runzheimer Data Sets 2017 IRS Business Mileage Rate at 53.5 Cents." Accessed Feb. 3, 2020.
- U.S. Government Publishing Office. "H. R. 606." Accessed May 1, 2020.
- Internal Revenue Service. "Publication 463 Travel, Gift, and Car Expenses," Pages 13-15. Accessed Feb. 3, 2020.
- Internal Revenue Service. "Publication 526 Charitable Contributions," Page 6. Accessed Feb. 3, 2020.
James Rada, Jr. was a newspaper reporter for eight years and earned 23 awards from the Maryland Delaware D.C. Press Association, Associated Press, Society of Professional Journalists, Maryland State Teachers’ Association and CNHI. He also worked for 12 years as a marketing communications writer, earning a Print Copywriter of the Year Award from the Utah Ad Federation. He holds a Bachelor of Arts in communications.