Claiming a mileage tax deduction is the best possible way to cut the amount of tax you owe to the IRS. But in recent years the authority has been very strict in mileage tax deduction rules. The tax amendment 2017 seriously limited the mileage tax deduction. Now you cannot claim the itemized deduction for expenses like annual mileage. The job and tax amendment 2017 also limited this deduction on relocation expenses. Only the active military personnel can claim this benefit while relocating to other places due to duty transfer.Read More
In the new amendment the following person can claim the mileage tax deduction.
- Medical appointment mileage
- Mileage used for non-profit purposes
The important part is that one has to have a good knowledge of ifta tax rates before filing for a mileage tax deduction. You also need to maintain a proper record for each business mile you claim for tax benefit.
Business Mileage for Self-employed Worker
As far as the mileage tax deduction is concerned, self employed can claim the maximum mileage tax deduction. He can claim as much as 58 cents per business mile for tax deduction. Self-employed can accumulate those miles by adding miles driven for client meetings, miles driven to other sites and miles driven to fetch the office supplies. If an individual drives both personal and business miles with the same vehicle then only business purpose miles will be deductible. Business miles started from the business premises to go anywhere for the business purpose. Miles driven from your house to the business location are only considered as the personal miles. Any person who has his house as his principal location of the business can claim both miles, starting from the house and coming back to the house from any business related work.
My dad was a truck driver. We all used to ride along with him. And the way he’d keep awake was to sing while he was going down the road. So we all joined in.Johnny Van Zant
There are two ways to claim your business mileage for a self-employed person.
1. By Actual Expense
By actual expense method, one can claim the entire operating cost of the vehicle used exclusively for business purposes including the vehicle depreciation value. You have to keep a thorough record with ifta reporting online for this method and you may end up getting a bigger tax deduction. All the vehicle related expenses like gasoline, tires, maintenance, insurance, licensing and registration fee etc. needs to be recorded properly. Along with vehicle depreciation, you also need the exact miles driven for the business purposes throughout the year.
2. By Standard Mileage Rate
In this method you have a predetermined rate in cents per miles as a tax deductible. If you select this method then you have to carefully log all your business miles and keep your personal miles away from it. In this method you cannot charge your vehicle’s other expenses like maintenance, depreciation, gas or insurances etc. But the parking fees and tolls can be claimed as long as they occur while you are driving on business. Once you have the correct number of miles driven in a year for business reasons, then you can simply multiply these numbers with the standard mileage rate for the year to get the mileage tax deduction for the year.
Which One Is the Best Option?
Well the best option depends on the type of car you are driving for business purposes. If you are driving a big car but less miles then the actual rate method is better for you. Because most of the time you will end up spending more on gas and maintenance if you have a big car. But if you are driving a small car with a lot of miles per day then the best option for you is the standard mileage rate.
Claim Medical Mileage
The IRS allowed you to claim all the miles driven while visiting a doctor, pharmacy and hospital as a tax deduction. One person can get as much as around 20 cents per mile as a medical deduction but there is a restriction on it. Your medical bill and medical deduction combined should be more than a certain percentage of your total gross income and you can charge that higher part as tax deduction.
Maintain a Detailed Record
Mileage tax deduction can save you a lot of money but be careful while charging any miles for tax deduction. You should refrain yourself from charging any undocumented miles. In case of an audit , the department of taxes definitely asks for records including dates, destinations and exactly why you went there.
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If you want to claim ifta fuel tax filing deduction then maintaining a proper record of all the expenses and miles is a must for you. Your travel logs should be in detail, clearly mentioning the date, time, destination and purpose of visit. Tracking every business mile can be a very hectic and difficult process but thanks to quite a few technology solutions and ELDs that can do it for you.
There are multiple mobile apps available in the market that will log your travel details for you. Once you have that then you can categorize these trips accordingly and print out the detailed report.
Claiming your mileage tax deduction is very crucial for the survival of a few companies or individuals. But make sure you have all the documents or log books backing your tax deduction claim. The IRS has put together certain rules about claiming your mileage tax deduction and if you are not sure about them then you should take the help of a tax professional.