How to Get a Business Mileage Tax Deduction

How to get a business mileage tax deduction

It’s quite easy to claim a business mileage tax deduction on your small business tax return. Whether you are an Etsy Seller, a blogger, a virtual assistant, or any number of things, most likely you are using your car on occasion for business purposes. That is your signal to calculate your business mileage tax deduction! Let me show you how.

What is business mileage?

Business mileage occurs when you drive your personal car for a business purpose. Examples might include, but are certainly not limited to:

  • an Etsy seller driving to a craft store for supplies
  • a blogger driving to a blogging conference
  • a virtual assistant heading to the post office to mail contracts

Every single time you drive your personal vehicle for a business purpose you are logging business miles. Those business miles can add up to a tax deduction.

 

How do you track business miles driven?

The IRS loves recordkeeping, and so their preferred method for tracking business miles is a log. Create your own simple mileage log and keep it in your car glovebox or purse. The mileage log should include columns for:

  • date
  • beginning odometer
  • ending odometer
  • calculation of miles driven
  • the business purpose of the trip
  • misc cash expenditures for items such as tolls or parking meters

 

What if you forgot to keep a log during the year? You might be able to justify your business miles in another way. If you have properly maintained separate business financial records during the year, pull up your business credit card statement and scan for purchases you drove to make. For example, if according to your business financial records you went to the post office 10 times, and the post office is 5 miles roundtrip, that is 50 business miles driven that year. The important thing is to be able to justify your claim of business miles driven should the IRS ever audit.

 

How do you calculate the tax deduction?

The IRS has made calculating your business mileage tax deduction surprisingly easy. Each year they publish standard mileage rates. You simply multiply your business miles driven during the year times the rate and voila! you have your tax deduction!

  • The 2017 Standard Mileage rate for business was 53.5 cents per mile
  • The 2018 Standard Mileage rate for business will be 54.5 cents per mile

For example, let’s say you determine you drove 100 miles for business purposes in 2017. Then 100 miles x .535 = $53.50 tax deduction.

Don’t forget to add any cash payments for tolls or parking also recorded on your log, these are deductible too.

 

Where do you claim the deduction on your tax return?

As a small business owner, you will file Schedule C at the end of the year along with your 1040 tax return. You deduct your calculated business mileage deduction on Line 9 of Schedule C. Easy!

 

Don’t forget to claim your business mileage tax deduction on this year’s tax return!