Guide to Tax Deduction for Business Miles

Posted By Joe Lavoie on Mar 3, 2016 | 0 comments

Do you ever drive a vehicle for business use? If you do you could be eligible for a tax deduction.  Some business owners are unaware of this tax benefit, or unsure about what activities it covers.

A common misconception is that the cost of driving between work and home can be included.  The IRS do not class commuting to and from work as business travel, as a result these miles cannot be deducted against your tax expenses.  Despite this most other forms of travel can be deducted.  The IRS allows you to deduct the cost of the following types of driving:

Types of Business Miles you can Claim for


Driving Between Job Sites

Electricians and plumbers for example regularly drive from one client to another.  Do you drive from one job location to another? You can deduct this from your business taxes.

Driving to Complete Business Tasks

Any driving for the benefit of the business can be deducted, for example picking up supplies or other business errands.

Driving to/from Client Meetings

Wherever you meet your clients, whether it be at their place of business, their home or a mutual meeting point such as a coffee shop, if you are required to drive there, you can include it in your business miles.

Driving Between Offices

Some businesses have multiple offices or work sites.  If you drive between two or more places of work, you can claim for a tax deduction.

Driving to/from a Temporary Workplace

The only exception to commuting to and from work, if you have to drive to temporary office or workplace, you can make a claim for commuting.  The criteria for this are that you drive to the temporary office for less than one year and that it is not your primary business location.



How to Calculate Your Vehicle Deduction

When it comes to calculating your tax deduction, there are two options, these include:

Using the Standard Mileage Rate

The standard mileage rate is set by the IRS and assumes a general deduction of 54 cents per mile.  Although this doesn’t take into account your costs for maintaining the vehicle over the year, it can often work out in your favor.

Using Your Actual Expenses

This method requires you to calculate the total cost of running your vehicle for the year, including: Insurance, maintenance and repairs, gas, registration fees and depreciation.

After working out your total costs you can then determine how much of your mileage is attributed to business travel.  If your vehicle is used solely for business use this is much simpler, just keep a record of the mileage at the start and end of the tax year.

If you use your vehicle for both personal and business use, you will need to keep track of the miles driven seperately.

For more information about tax deductions for business miles, visit the IRS.


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