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.
Business mileage occurs when you drive your personal car for a business purpose. Examples might include, but are certainly not limited to:
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.
Some small business owners think they can charge gas purchases to their business when they use their car for a business purpose. This is not correct. Keep reading to learn how to correctly get a mileage deduction on your tax return.
The IRS loves record keeping, and so their preferred method for tracking business miles is a log. Create your own simple mileage log and keep it in your car glove box or purse. The mileage log should include columns for:
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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!
For example, let’s say you determine you drove 100 miles for business purposes in 2020. Then 100 miles x .575 = $57.50 tax deduction.
Don’t forget to add any cash payments for tolls or parking also recorded on your log, these are deductible too.
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!