Wednesday, January 8, 2014

Mileage Deduction: Business use of a car

With tax season approaching, you may be wondering which mileage is deductible and which is not.  This will give you a basic idea, but you must consult a specialist for further detail and the applicability to your case. 

If it is a commute to and from work, it is NOT deductible, unless you were traveling to a temporary work location.  If it was a temporary work location, ask your tax specialist for further detail.  You cannot deduct the commute EVEN IF you are a small business owner.  On the other hand, you can deduct the mileage from one work location to another.

Travel required by work:  suppose you are a real estate agent, delivery person, or for some reason your job requires you to use your personal vehicle to get somewhere.  In that case, your mileage is deductible, and you must keep a detailed log.  As a small business owner, you can deduct all costs associated with the business, and this includes the travel to the office supply store, to meet with a client, or to deliver office related documents.

The mileage deduction for 2013 is 56 cents per mile, and there are certain requirements you must meet to take it.  Consult with your tax specialist to determine whether you qualify.

Another alternative is to use the actual cost method, in which you can deduct the actual cost of using your car for a business purpose.  This gets tricky, but in some instances it may yield a higher deduction.



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