Which is better - deducting the standard mileage rate or actual expenses?

With the fluctuating cost of gas, it might be a good idea to revisit which tax deduction is the most beneficial - claiming 54.5 cents per mile (2018) or your actual vehicle expenses. Claiming the standard mileage rate is easier. All you have to do is keep track of your business miles and multiply them by the current rate. In addition to the standard mileage rate, you may also deduct the costs for parking and tolls. Plus, if you are self-employed, you can deduct the interest paid on your car loan.

Claiming actual expenses may result in a larger deduction, but requires a bit more diligence in your record keeping. First, keep all receipts for gasoline, oil, repairs, and tires. Also, track any amounts paid for licensing and registration, insurance, garage rental, leasing, parking, tolls, and rentals. Sales tax and luxury tax are not deductible, although the amounts you pay can be added to the cost of your car and recovered through depreciation.

Regardless of what method you choose, the expenses are limited to your business use. Therefore, you must document the total miles and the business miles for the year to calculate the business-use percentage.

Tax Tips Small Business

  • Do You Know How Much Your Business Is Worth?

    Tips for placing a value on your business

    There are several reasons why you should know the value of your business. if you are planning to sell your business, the general rule is that you should sell it for fair market value. In many instances the term "fair market value" is somewhat ambiguous. In the simplest sense, fair market value is what a willing buyer would pay a willing seller, with each party knowing all the pertinent facts.

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Small Business Quick Tip

  • Like Kind Exchange

    If you are disposing of property used in your business, you may want to consider a like-kind exchange to defer the taxable gain on the sale.
Tuesday, 24th April 2018
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Tax Tips Personal

  • Refinancing Your Home Mortgage

    What's deductible and what's not?

    While there are benefits to refinancing your home mortgage, most refinancing costs are not deductible on your tax return. There is one exception, however. The amount you pay for points, or prepaid interest, may be amortized over the life of your new loan. Although this might not amount to much when you spread it out over 15, 20, or 30 years, don't file away your closing papers quite yet.

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Personal Quick Tip

  • Medical and Charitable Mileage

    Do you use your auto for charitable purposes? What about going to and from the doctor or dentist? Your mileage for both medical and charitable purposes may be deductible on your tax return. It is important to set up a mileage log and keep it handy so you can track your deductible mileage throuhghout the year.