Get the Most from Your Mileage Tax Deduction

Mileage Tax Deduction

"I'm deducting this right now!"

Do you drive for your job? Then you might be eligible for a mileage deduction. Here is an easy-to-understand guide to the IRS standard mileage deduction. Happy filing!

1. What kind of driving is deductible?

If you drive for business in some way and your employer does not reimburse you for gas, those miles are eligible for the deduction. Common jobs that accrue deductible miles include realtors, sales, and contractors.

In addition, miles logged for charitable organizations and medical or moving expenses can also be deducted.

2. Is it worth my time to log the miles and file the deduction?

To be able to take advantage of this deduction, your unreimbursed expenses must equal more than 2% of your salary. If you have to drive three miles down the road several times a week to go from the main office to the salesroom, it’s not a necessary to start logging your miles. If, however, you spend a great deal of each day in the car, you could be missing out on some major tax savings if you do not deduct your miles.

3. What is the rate for 2010 and 2011 for mileage?

In 2010, the business mileage rate was 50¢ per mile. The rate for mileage accrued for charitable organizations was 14¢ per mile. The rate for medical or moving expenses was 16.5¢ per mile.

The new rates for 2011 are as follows:

  • 51¢ per mile for business.
  • 14¢ per mile for charitable service.
  • 19¢ per mile for medical or moving purposes.

4. What kind of driving is not eligible for the deduction?

You are not entitled to the deduction for miles driven during your commute. You cannot be using more than five cars at once to qualify, and your car cannot be for hire. (In other words, you cannot deduct your mileage if you are running a taxi company). Finally, if this is the first year that you have accrued unreimbursed miles for business, you must take the standard mileage deduction, rather than the Actual Expenses Deduction (see question 5 below).

5. What is the Actual Expenses Deduction?

If you believe that the cost of using the car will add up to more than the 50¢ per mile that the standard mileage deduction will provide you, it might make sense to deduct your actual expenses. These include the cost of lease payments, licenses, repair, insurance, maintenance, depreciation, parking, etc. (Do not forget, however, that parking expenses are still deductible even if you choose the standard deduction). This option is not for everyone, but if you’re organized and diligent, you might find that this is the better option for you.

6. Is there anything that can help me to log my miles?

For years, the only way to keep track of miles for this deduction was with pen and paper. Now, there are several programs out there that can log your miles automatically through your GPS. Check out Mileage Logger or Garmin Reports. Unfortunately, none of this technology is cheap, so this is only worth your while if you drive a great deal, are particularly disorganized, or know that you will be logging miles for years and years to come.

If you have an iPhone, I did find a .99 app called Day Tracker and an app called AutoMilez that you might find useful.

If you track your miles, how do you do it?

photo by greggoconnell



Last Edited: March 28, 2013 @ 12:49 am The content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Emily Guy Birken

Emily Guy Birken is a former English teacher and respected personal finance blogger. She lives in Milwaukee, Wisconsin with her engineer husband and two high-energy little boys. She has written two books: The Five Years Before You Retire and Choose Your Retirement. Emily's thoughts on parenting and life in general are found at The SAHMnambulist.

Comments

  1. I started tracking my miles because I drive a lot for my charity work however, I don’t do itemized taxes yet so it was a little bit of a waste of time.

  2. Keep those receipts! I’ve been refused a tax deduction because I ended being audited and I couldn’t back up my claims with receipts! HUGE lesson learned 🙁

  3. The important thing is to keep good records. If you don’t get audited then you won’t ever need them, but if you do, they’ll be a lifesaver.

  4. I never knew you could log miles for medical reasons…interesting.

    Keeping logs is important, and every minute you spend to document anything is worth your time. With gas at $3.60 a gallon, I spend about .18 per mile purely in gas, with the medical deduction, for example, I would basically get $.05 per mile back assuming 25% taxes. That’s like going from 20mpgs to 25…worth my time, no doubt!

  5. I found MileMarx GPS tracker to be very easy to use.