IRS Business Mileage Deduction Requirements

IRS Business Mileage Deduction Requirements

If you are an independent contractor or W-2 employee who uses your personal auto for business and you are NOT reimbursed by your employer (uncommon), you can deduct business mileage at the rate of 54 cents per mile on 2016 on your tax return.

That’s right! If you use your vehicle for business purposes, you can deduct 54 cents for every mile you drive.

The key to being able to deduct business mileage is maintaining a Written Daily Log to support business miles driven.

What Does the IRS Consider Business Mileage?

You qualify for business mileage deduction…

*If you work in an office but also have to travel to another location to conduct business.

*If you have to run errands like to the bank or post office for business purposes.

*If you travel out of town by car to meet with a client or in town for a brunch, lunch or dinner.

*If you are traveling by plane but have to drive to and from the airport.

*If you are working a temp job that is expected to last for less than a year.

*If you are looking for a job in the same industry in which you are employed.

The following scenarios are not deductible as business mileage:

*Commuting or driving to a permanent place of business (including your home office).

*Driving to a place you have worked or are expecting to work for more than a year.

What Is Required to Deduct Mileage for Your Business?

If you plan on deducting mileage for business purposes, the IRS requires that you provide an adequate record that your mileage is directly related to your business. This means you will need to keep a written mileage log to support your deduction including: the date, destination (city, town or area), business purpose, odometer reading (start, stop, mileage this trip), toll, amount.

Mileage Apps Help You Effectively Tracking Your Business Mileage

Generally, retain written mileage logs for at least three years from the date you file your tax return. Don’t like keeping detailed manual records? There’s an app for that! Check out MileIQ and dozens of similar apps that track mileage.

Get Tax Help from Plano Tax Prep

In addition to deducting business miles, some taxpayers may be eligible to deduct medical miles and/or  miles driven for charitable work. You may be able to substantially reduce your tax liability but you must follow the rules so consider hiring a local tax professional.

At Plano Tax Prep, we provide year-round tax service that is affordable. To speak with a tax pro or to get a free price quote, contact Plano Tax Prep.