Some of the driving you do may be tax deductible. The Internal Revenue Service has guidelines, called standard rates, to use for calculating how much you can write off on your tax return. The standard rates vary depending on the purpose of your driving. You have the option of using actual vehicle expenses, but using the allowance per mile simplifies your record-keeping chores.
Each year the IRS publishes standard mileage rates that are updated to reflect current average driving costs. The standard rates cover three categories of driving. For example, in 2012 the standard rate for business use of a personal vehicle was 55.5 cents per mile. You could deduct 14 cents per mile for driving done as part of work for a charitable organization and 23 cents per mile for trips made for medical reasons or for moving.
IRS regulations say you can only deduct mileage that is directly related to the stated purpose. For example, if you use your car on the job to travel to see a client, make a bank deposit for your employer or pick up office supplies, the miles you drive are tax deductible. Commuting between your home and regular workplace is not deductible. Also, you aren’t allowed to mix business and personal use. If you do any personal errands, any further mileage on that trip is disallowed.
When you use the IRS standard rates, you do not have to keep detailed records of expenses such as gas, oil and repair costs. You do have to keep a record of your deductible driving, usually in the form of a mileage log. Each log entry needs to include the date, where you drove and the purpose of the trip. Record the starting and ending odometer readings.
Employers may reimburse employees for using their personal vehicles for work-related driving. When your employer reimburses you, the money you are paid is considered a business expense and is tax free, up to the IRS standard mileage rate. You can’t write off mileage for which you receive reimbursements. However, if your employer pays less than the standard rate, you can take the difference as a tax deduction. For instance, if your employer pays 35 cents per mile and the standard rate is 55.5 cents per mile, you can deduct the remaining 20.5 cents per mile.
- Turbo Tax: Business Use of Vehicles
- 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.
Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.