This rate applies no matter where in the United States you drive, and no matter what type, model or make of car you drive. It is available for both a car that you own and a car that you lease.
You can deduct the standard mileage allowance in lieu of the actual expenses if operating your car, which include-
· auto club membership
· license and registration
· lease payments
· repair and maintenance
· wash and wax
Or you can elect to deduct the business portion of your actual expenses.
In addition to the standard mileage allowance you can deduct any business-related parking fees and tolls. A self-employed individual can also deduct the business portion of any auto loan interest and state and local personal property taxes on Schedule C. Employees cannot deduct the business portion of auto loan interest, but they can deduct qualifying state and local personal property taxes as a tax on Schedule A.
Employees report auto expenses on Form 2106 or 2106EZ "Employee Business Expenses". The total of all employee business expenses is deducted in the "Miscellaneous" section on Schedule A. Miscellaneous expenses are only deductible to the extent that they exceed 2% of the taxpayer's Adjusted Gross Income (AGI). Sole proprietors report auto expenses on Schedule C.
You cannot use the standard mileage allowance if the car is used for hire, such as a taxi, if you have 5 or more vehicles in use for business at the same time, such as a fleet operation, or if you have claimed a Section 179 expense deduction and/or any method of depreciation other than straight line in the past.
You cannot deduct commuting - the miles from your home to your place of business or your first business stop of the day and from your place of business or your last business stop of the day back to your home. You can deduct travel between different job locations, and travel from your home to a temporary (usually lasting less than one year) job location outside the metropolitan area where you live and normally work.
Whether you claim the standard mileage allowance or actual expenses you must keep good records. You must document the total mileage on your car for the year with a breakdown of business, commuting and other personal miles, and the date and business purpose for each business trip. A pocket date book is good enough. Enter the car's mileage on the first and last day of the year, and enter the business miles and name of client visited or business purpose for each trip. You should also record parking fees and tolls in the date book.
Of course you must reduce the deduction for business use of your car by any reimbursement you receive from your employer under an "accountable" plan. If your employer reimburses you at a rate lower than the IRS allowance, say 30 cents per mile, you can deduct the difference. However, if your employer reimburses you at a rate higher than the IRS allowance, say 60 cents per mile, you may have additional taxable income.
If your employer gives you a flat monthly car allowance, say $100.00 per month, which is included in the taxable wages reported on your Form W-2, you do not have to reduce your deduction by this amount.
BTW – My post “A Sample of Sampling” today at THE FLACH REPORT discusses a method for documenting business mileage.