Allowable Mileage Tax Deduction

January 6, 2012 in General by admin4 | No comments

The current allowable mileage deduction amount is 58.5 cents per mile. This is due to an increse in mid 2008 that attempted to follow the trend in rising gas prices. It was previously at 50.5 cents per mile. You are currently able to deduct expenses related to cost of your car for business purposes. There are two different ways to deduct these expenses:

 

  • Standard Mileage- If you chose to use this method, then you will take the standard mileage deduction amount allowed by the IRS and multiply it by the amount of miles you drove for business related purposes.

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  • Actual Costs-If you chose this method instead then you will need to keep track of all costs related to business travel. You will be able to deduct: Depreciation, licenses, gas, oil, tools, lease payments, insurance, garage rent, parking fees, registration fees, repairs, and tires.

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    You need to keep excellent record no matter what method you use. The IRS does not consider travel from home to work as work related. You must be able to provides dates of travel along with the reason for the travel and either amount spent on gas or miles driven. You may want to try and figure your deduction using both methods and see which one allows you a larger deduction. If your company owns your vehicle then you may not deduct any related expenses to that vehicle.

    TurboTax online offers free deduction calculators to help you get the most savings this tax year.

    Chow Tai Fook

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