If you use a personal vehicle for work purposes, you may be able to deduct some of the expenses on your tax return.
There are two general methods of deducting your vehicle expenses.
- Standard Mileage rate
- Actual expenses and Depreciation
You may not use the standard mileage rate for a vehicle after claiming accelerated depreciation on that vehicle. The standard mileage rate is not available to fleet owners (more than 4 vehicles). If you use the same vehicle for both business and personal travel, it is generally easier to maintain records if you use the Standard Mileage method.
Standard Mileage Rate
The standard mileage rate is a set rate per mile that you can use to figure the costs of operating your car for business purposes.
Beginning January 1, 2015, the standard rates are:
- 57.5 cents per mile for business miles driven
- 23.0 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
Actual Expenses and Depreciation
All expenses necessary for operating and maintaining your vehicle plus depreciation can be deducted. If the vehicle is also used partially for personal travel all expenses must be prorated to deduct only the business portions.
How to Prove Expenses: You should keep the proof you need in an account book, calendar, diary, statement of expense, or similar record. You should also keep receipts that, together with your records, will support each element of an expense.
Record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence. You do not need to write down the elements of every expense on the day of the expense. If you maintain a log on a weekly basis which accounts for use during the week, the log is considered a timely-kept record.
Your log should include:
- Date of travel
- Destination and total miles traveled
- Business purpose
Determine Which Miles to Deduct
The following chart (IRS Pub 17) shows how to determine which mileage can be deducted.
The place where you reside. Transportation expenses between your home and your main or regular place of work are personal commuting expenses.
Regular or Main Job
Your principal place of business. If you have more than one job, you must determine which one is your regular or main job.
Consider the time you spend at each, the activity you have at each, and the income you earned at each.
Temporary Work Location
A place where your work assignment is realistically expected to last (and does in fact last) one year or less.
Unless you have a regular place of business, you can only deduct your transportation expenses to a temporary work location outside your metropolitan area.
If you regularly work at two or more places in one day, whether or not for the same employer, you can deduct your transportation expenses of getting from one workplace to another.
If you do not go directly from your first job to your second job, only the transportation expenses of going directly from your first job to your second job may be deducted.
You cannot deduct your transportation expenses between your home and a second job on a day off from your main job.
Here to bring clarity to your tax planning
If you would like help in the preparation and planning to get you and your financial records organized, call our team of dedicated advisors at 218.847.5225 or contact us at either office location in Detroit Lakes, MN or Fargo, ND and we will be happy to help you.