As you gather together all of your paperwork and financial records to file your taxes, don’t forget that you may be able to deduct mileage for business use of your car, truck, or van. You can either deduct the actual cost of driving and using your vehicle, or you can use the 2017 standard mileage rate.
Note: If the 2017 filing deadline has already passed by the time you read this, don’t panic. You can simply file an amended tax return (Form 1040X) to claim or revise your mileage deduction. Give us a call if you need any help!
What Is the 2017 Standard Mileage Rate?
For your 2017 taxes (filed in 2018) the standard mileage rate is 53.5 cents per mile. The IRS determines the standard mileage rate each year by factoring in average gas prices and average maintenance costs. So, when you deduct mileage based on the standard rate, that covers everything: gas, repairs, new tires, oil changes, and so on.
For many people, the standard mileage rate simplifies things because they don’t have to keep track of different records. However, for other folks, claiming the standard mileage rate isn’t effective because it costs more to run their vehicle than the standard rate allows.
How Do I Calculate “Actual Cost”?
If you prefer to calculate your mileage deduction based on the “actual cost” of running your vehicle, you are welcome to do so. You just have to keep accurate records and receipts throughout the year of miles traveled, gas purchased, maintenance performed, fluids refilled, etc. This may be in your best interest if you have a vehicle that is expensive to run, or if you simply want to make sure that you’re getting the best deduction possible.
Can I Switch Methods?
You can switch between using standard mileage and actual cost if you choose to use the standard rate for the first year in which you deduct mileage. If, in that first year, you use the actual cost method, that locks you into using actual cost for the life of the vehicle.
If you’re curious about your different options for deducting mileage (and other business expenses), give the experts at Taxation Solutions, Inc. a call! We are your local resource for tax information, guidance, and preparation assistance in Virginia Beach. Call our team today!