Business Expense Deductions: What Can I Write Off?
From Tax Guide.
Tax Guide · Arab, Alabama
Vehicle and Mileage Deductions for Business
Learn how the mileage deduction works, which drives count as business use, and what mileage log the IRS expects you to keep if you use a vehicle for work.
The short answer
Can I deduct mileage for my business vehicle?
Yes, if you are self-employed or run a business and you drive for business purposes, you can usually deduct the cost of that business use, but you have to be able to prove it.
The deduction is based on how much of your driving is for the business. A trip to meet a client, pick up supplies, visit a job site or make a delivery generally counts. Driving from home to a regular workplace is commuting, and commuting is usually not deductible.
The deduction is not a flat write-off for owning a truck or car. It is tied to the business share of your driving, which is why the records matter so much. If you are still sorting out what else counts, our guide to business expense deductions covers the bigger picture.
Two methods
Standard mileage rate or actual expenses: which method is used?
The IRS lets most business owners choose between two ways to figure a vehicle deduction: the standard mileage rate or the actual expense method.
With the standard mileage rate, you multiply your business miles by a per-mile rate the IRS sets and publishes, and it can change from year to year. The rate is meant to cover gas, wear, insurance and depreciation together, so you do not track those costs one by one.
With the actual expense method, you add up the real costs of running the vehicle and deduct the business share. Depreciation can be part of that, and it is reported on Form 4562. There are rules about which method you can use in later years depending on how you started, so it helps to decide with a preparer before the first year, not after.
| Standard mileage rate | Actual expenses | |
|---|---|---|
| What you track | Business miles, dates and purposes | Every vehicle cost plus total miles |
| Costs covered | Built into the IRS rate | Fuel, repairs, insurance, tires, registration, depreciation |
| Paperwork | Lighter | Heavier |
| Depends on | Vehicle and method rules | Business share of total use |
Parking fees and tolls for business trips are generally deductible on top of the standard rate. The rules for switching methods can be strict.
Record keeping
What does a mileage log need to include?
A good mileage log records each business trip as it happens, not from memory at tax time.
The IRS expects records made at or near the time of the trip. Many people use a notebook in the glove box or a phone app, and either can work as long as the entries are complete and consistent. Keep the log with your other tax records for at least three years.
- The date of each trip
- Where you went (the destination or job site)
- The business purpose, such as "delivered order to customer" or "met with supplier"
- Miles driven, or the starting and ending odometer readings
- Your odometer reading on the first and last day of the year, so total miles are known
What counts
Which trips count as business use, and which do not?
Trips made to serve your business generally count, and trips that are personal or purely commuting generally do not.
Driving between job sites, to a bank for a business deposit, to buy inventory or to see a client is normally business use. Driving from home to a single regular office or shop is commuting. There are exceptions, for example when your home is your principal place of business, so the facts of your situation matter.
A vehicle used for both business and personal driving is common. You deduct only the business share. If you have a home office, see our guide to the home office deduction, because your home office can affect which trips count.
Employees are a different case. Deducting unreimbursed vehicle costs as an employee has been limited by recent law changes, and rules change, so we confirm the current ones before saying whether it applies to you.
Common problems
What mistakes cause a vehicle deduction to be denied?
The most common problem in an audit is a deduction with no log to back it up.
A round number of miles with no dates or purposes is easy to challenge. Another frequent issue is deducting a vehicle as entirely business when the family also uses it. Claiming the same costs under both methods is another. When in doubt, the log and the receipts tell the story.
If you get a letter asking about your vehicle expenses, do not ignore it. Our guide to what to do when you get an IRS notice explains the first steps, and you can call the office for help.
- Reconstructed logs made months later
- Counting commuting miles as business miles
- Forgetting that personal use of the vehicle reduces the deduction
- Mixing the two methods without checking the rules
Getting started
How do I start tracking business mileage?
Start today with a simple log, and record the odometer reading before your next trip.
If you did not track earlier in the year, write down what you can support with calendars, invoices, receipts and job records, and begin a proper log going forward. A reasonable reconstruction from real records is better than a guess, but it is never as strong as a log kept at the time.
Keep fuel, repair and insurance receipts even if you plan to use the standard rate. If you later need the actual expense method, or if your situation changes, you will have what you need. Our guide to receipts and expense tracking has more habits that make tax time easier.
How we can help
How Melton Tax Services can help with vehicle deductions
Our office can look at how you use your vehicle and prepare your return with the deduction method that fits your records.
Our income tax preparation service covers individuals, families, businesses and the self-employed. We explain your options, look at what records you have and report the vehicle expenses the way the rules require. We do not promise a particular result, since the deduction depends on your actual business use.
We serve Arab and the surrounding area. Call 256-586-4635 or use our contact page to set up a time. Please bring your mileage log and receipts to the office, and do not send Social Security numbers or documents through the website.
Answers
Questions about mileage deductions
Do I have to keep a mileage log if I use the standard mileage rate?
Yes. The standard rate replaces tracking each vehicle cost, but you still need records of your business miles, dates and purposes. Without them, the deduction can be denied.
Is driving to work a deductible business expense?
Usually not. Commuting between your home and a regular place of work is generally a personal expense. Driving from that workplace to a client or job site is a different matter and may count.
Can I deduct a vehicle I use for both business and personal driving?
You can generally deduct only the business share of the costs. That share is based on business miles compared with total miles for the year.
Can I use both the standard rate and actual expenses in the same year?
Not for the same vehicle in the same year. You pick one method for a vehicle, and there are rules about changing methods later. We check those rules before choosing.
What if I lost my mileage records?
You may be able to rebuild them from calendars, invoices, job records and receipts. A rebuilt record is weaker than one kept at the time, so start a proper log right away.
Can employees deduct mileage on their own tax return?
Rules for unreimbursed employee expenses have been limited in recent years and can change again. Employers may reimburse mileage under a separate arrangement. We confirm the current rules before advising on your return.
Read next
Related reading
Home Office Deduction: Who Qualifies and How It Works
From Tax Guide.
How to Track Business Expenses and Receipts
From Tax Guide.
Self-Employment Tax Explained: What You Owe and Why
From Tax Guide.
Income Tax Services
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