IRS Mileage Deduction Rules For Small Business Owners
If you own a small business and drive a vehicle then you'll want to study the IRS mileage deduction rules so you can maximize your deductions.
Whether you know it or not, your car represents one of the largest possible sources of tax deductions for your business.
So what do the IRS mileage deduction rules say you can write off with respect to the miles your drive? There are two areas: straight business mileage and commuting mileage.
IRS Mileage Deduction for Business Anytime you accrue mileage for your business you can deduct it as a business expense.
If you drive from your office to a business meeting and back, you can deduct the round-trip mileage as a business expense.
If you drive from your office to the bank and back to your office, you can deduct the round trip mileage as a business expense.
Now here's the neat part of this equation.
Suppose the dry cleaner and grocery store are in the same shopping center as your bank.
If you have to go to the bank on business, you can stop at the dry cleaner's and grocery store after you make a deposit at the bank.
The mileage for the entire trip can still be deducted as a business expense, even though you added in some personal errands.
As long as the mileage has a primary business purpose, errands are allowed.
Thank you Uncle Sam! IRS Mileage Deduction for Commuting According to IRS regulations, commuting mileage is not officially a deductible business expense.
Specifically, IRS Revenue Ruling 90-23 says, "Daily transportation costs for going between the taxpayer's residence and one or more regular places of business or employment are non-deductible personal commuting expenses.
" However, there is a way you can get around this regulation.
IRS Revenue Ruling 55-109 (often called the "two business location rule") says, "Daily transportation costs for going between two specific business locations (whether in the same business or different businesses) are deductible business expenses.
" So if you have both a home office and a remote office at a different location, you can deduct your commuting mileage between your house and remote office as long as you follow certain rules.
To clarify, let me add that your home office can be for a home-based business, such as MLM or network marketing, or can be the home-office for your regular business, which also has a remote location.
But there's one more rub.
Normally, according to Revenue Ruling 55-109, you would only be able to deduct a one-way trip between your house and your remote office.
But there is a way to deduct the full round-trip commuting mileage.
Simply be sure that you actively engage in business activities in your home office both before you leave for your remote office and after you come back.
Some More Details on Mileage Deduction To really make the commuting mileage deduction work in your favor, you need to fulfill a few rules and regulations.
1.
Make sure your home office is a principle place of business, which means one of these three items applies to your home office: - The primary value of your business is delivered there - You regularly meet with customers or prospects there - The primary management or administrative function of your business is conducted there As long as any of these are true of your home office, it counts as a principle place of business.
2.
You must document your activity in your home office to prove that you actively engaged in business activities before and after you go to your remote business location.
You don't need to write a book on your activities, but just jot down a few lines in a business diary or spreadsheet.
Be sure you are totally consistent by entering data every single workday (not just for 90 days, as for the mileage log below).
3.
Keep a mileage log of your driving.
Make sure to log every single trip between your home office and your remote office, and vice versa.
Also be sure to document every business mile for which you want to claim a deduction.
The really great part of this is that according to URS rulings, you only need a keep a mileage log for "a typical 90-day consecutive period" each year to determine your annual business mileage.
That's not bad.
Just be sure the 90-day period is fairly typical of your average driving habits.
What is Your IRS Mileage Deduction Worth? Documenting your mileage and your home-business activities can seem tedious but it can create a giant business expense that you can use as a deduction at the end of the year.
In 2009 the IRS is allowing a deduction of 55 cents per business mile driven.
If you typically commute 5,000 miles a year, that's a $2,750 deduction.
What's more, with proper documentation you can also deduct: - 24 cents per mile driven for medical or moving purposes - 14 cents per mile driven in service of charitable organizations So putting pen to paper can really save you a bundle in taxes by creating large mileage deductions.
Don't you think these mileage deductions are worth a little extra time?
Whether you know it or not, your car represents one of the largest possible sources of tax deductions for your business.
So what do the IRS mileage deduction rules say you can write off with respect to the miles your drive? There are two areas: straight business mileage and commuting mileage.
IRS Mileage Deduction for Business Anytime you accrue mileage for your business you can deduct it as a business expense.
If you drive from your office to a business meeting and back, you can deduct the round-trip mileage as a business expense.
If you drive from your office to the bank and back to your office, you can deduct the round trip mileage as a business expense.
Now here's the neat part of this equation.
Suppose the dry cleaner and grocery store are in the same shopping center as your bank.
If you have to go to the bank on business, you can stop at the dry cleaner's and grocery store after you make a deposit at the bank.
The mileage for the entire trip can still be deducted as a business expense, even though you added in some personal errands.
As long as the mileage has a primary business purpose, errands are allowed.
Thank you Uncle Sam! IRS Mileage Deduction for Commuting According to IRS regulations, commuting mileage is not officially a deductible business expense.
Specifically, IRS Revenue Ruling 90-23 says, "Daily transportation costs for going between the taxpayer's residence and one or more regular places of business or employment are non-deductible personal commuting expenses.
" However, there is a way you can get around this regulation.
IRS Revenue Ruling 55-109 (often called the "two business location rule") says, "Daily transportation costs for going between two specific business locations (whether in the same business or different businesses) are deductible business expenses.
" So if you have both a home office and a remote office at a different location, you can deduct your commuting mileage between your house and remote office as long as you follow certain rules.
To clarify, let me add that your home office can be for a home-based business, such as MLM or network marketing, or can be the home-office for your regular business, which also has a remote location.
But there's one more rub.
Normally, according to Revenue Ruling 55-109, you would only be able to deduct a one-way trip between your house and your remote office.
But there is a way to deduct the full round-trip commuting mileage.
Simply be sure that you actively engage in business activities in your home office both before you leave for your remote office and after you come back.
Some More Details on Mileage Deduction To really make the commuting mileage deduction work in your favor, you need to fulfill a few rules and regulations.
1.
Make sure your home office is a principle place of business, which means one of these three items applies to your home office: - The primary value of your business is delivered there - You regularly meet with customers or prospects there - The primary management or administrative function of your business is conducted there As long as any of these are true of your home office, it counts as a principle place of business.
2.
You must document your activity in your home office to prove that you actively engaged in business activities before and after you go to your remote business location.
You don't need to write a book on your activities, but just jot down a few lines in a business diary or spreadsheet.
Be sure you are totally consistent by entering data every single workday (not just for 90 days, as for the mileage log below).
3.
Keep a mileage log of your driving.
Make sure to log every single trip between your home office and your remote office, and vice versa.
Also be sure to document every business mile for which you want to claim a deduction.
The really great part of this is that according to URS rulings, you only need a keep a mileage log for "a typical 90-day consecutive period" each year to determine your annual business mileage.
That's not bad.
Just be sure the 90-day period is fairly typical of your average driving habits.
What is Your IRS Mileage Deduction Worth? Documenting your mileage and your home-business activities can seem tedious but it can create a giant business expense that you can use as a deduction at the end of the year.
In 2009 the IRS is allowing a deduction of 55 cents per business mile driven.
If you typically commute 5,000 miles a year, that's a $2,750 deduction.
What's more, with proper documentation you can also deduct: - 24 cents per mile driven for medical or moving purposes - 14 cents per mile driven in service of charitable organizations So putting pen to paper can really save you a bundle in taxes by creating large mileage deductions.
Don't you think these mileage deductions are worth a little extra time?
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