So by now you’ve likely heard that you need to track your business mileage from your tax preparer but have been resistant to start tracking your mileage because it’s too time consuming or you’re just not aware of the rules. If time is your issue, I will admit up front I cannot help you. However, if you are not aware of the rules then I can help! The following information will help you understand what qualifies for business use vs. personal use and I’ve also included information on what type of information you’ll want to document to retain in your tax records.
- Mileage between your home to your regular or main job is never deductible.
- Mileage between your home and your second job is never deductible.
- Mileage between your home and a temporary work location is deductible if you have a regular or main job at another location.
- Mileage between a temporary work location and your regular or main job is always deductible.
- Mileage between a temporary work location and your second job is always deductible.
- Mileage between your regular or main job and your second job is always deductible.
Step 2, now that you know what is deductible and what is not deductible the next step is to know what documentation/ information you are required to retain to support your vehicle deduction. The IRS will require you to support your standard mileage deduction by documenting the following information:
- The date of travel
- The destination (city, town, or area)
- The business purpose (for example picking up supplies from a vendor, making deposits at the bank, lunch with a prospective customer, etc.)
- The number of miles driven
Also, it’s important to note that the IRS reimburses mileage at a rate of 54.5 cents for every mile in 2018 which is up 1 cent from the rate in 2017. As a result, the standard mileage deduction can add up quickly which is why it’s important that you retain the appropriate support for this deduction.
This is a quick summary but there is always other information you will want to consider so I recommend you consult with your CPA. The other factors you’ll want to consider when deducting the cost of your vehicle include consideration of using the standard mileage rate deduction vs. actual cost deduction and whether or not you have five or more cars that are used for business among other things.
If you have any questions, feel free to contact me directly.