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

  • Employee Meals: When Does the 50-Percent Limit Apply?

    Don't reduce your deduction if you aren't required to

    In most cases, an employer is only allowed to deduct one-half of the expense that is paid to employees for meals. However, in some instances, the full amount is allowed.

    Read more ...

Small Business Quick Tip

  • Business Mileage Rate

    Instead of deducting the actual expenses for the business use of your vehicle, opt for the standard mileage rate. In 2016, you can deduct 54 cents for each business mile you drive.
Saturday, 25th May 2019
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Tax Tips Personal

  • Overlooked Employee Business Expenses

    Don't miss out on deductions you are allowed to take

    Unreimbursed employee business expenses are allowed as a miscellaneous itemized deduction provided they exceed two percent of your adjusted gross income when combined with all your other miscellaneous expenses.

    Read more ...

Personal Quick Tip

  • Teacher Expenses

    If you are a teacher who spent your own money for classroom supplies, you can take a deduction for up to $250 of those costs.