Business Miles Allowance Tax Deduction
People who are in business for themselves and are sole proprietors are often unaware of the savings that they can get from their upcoming tax burden.
Federal tax law also lets you get a deduction for yourself if you work for an employer who has you do some traveling in your own car as part of your job, as long as they don't give you a reimbursement for it. The details are complex though.
People who have businesses are often more aware of the mileage tax savings available, but not always. Here, I'll fill everyone in on the deal about how to deduct or take an allowance for the tax issue and save a lot of money.
The year 2016 brought us a new rate that is lower than the rate for 2015 by 3 and a half cents.
The 2016 rate is only 54 cents per mile for an allowance or deduction.
In the year 2013 if you drive your car or truck for business you could have deducted $0.565 cents for every mile driven for business. In the year 2014 the rate is down by a half of a cent to $0.56 per mile for business travel in your car.
The year 2015 brings us a big bonus for mileage allowance at $0.57.5 cents per mile. This is the highest it has been so far. That and the price of fuel lowering we are having an advantage as consumers. The government wants you to log the info as it is driven. We have a link on the website here to print a free mileage log.
You can print it out and make as many copies as you need for travel.
They want you to keep track of the miles as they happen.
Or... The Real Cost Method
The IRS calls it the Actual Expense Method. I call it the real cost of managing the deductible expenses for your vehicle. They are tolls, garage rent, depreciation, gas, oil, insurance, lease payments, licensing and registration fees, tires, vehicle repairs, and parking fees.
So if, your costs are higher with this method you should use it to take the deduction.
I like the Mileage Allowance Tax Deduction method
As mentioned in the top of this article, you keep track of the mileage and deduct 57.5 cents per mile in 2015, 56.5 cents for every mile driven in the year 2013, and $0.56 for a mile in 2014 .
The low cost for vehicle fuel and an increase in deduction, gives us consumers the best deal yet.
Every year, the Mileage Deduction or Allowance, as it is called, changes, and sometimes it changes in the middle of the year at the end of June and beginning of July.
Cons of the Mileage Allowance Tax Deduction Method
If you are a small business owner who is leasing a vehicle, then you have to use the standard mileage allowance. You can not have a fleet of more than 4 cars operating at once, and can't have claimed a depreciation deduction in a previous year. There are a few more details. One is that, you can't claim a leased car expense after 1997.
When you buy a business vehicle, you have to claim the standard mileage allowance the first year that you own the car to continue to claim the car the same way in the following years.
These things don't apply to me, so I love the mileage allowance - deduction method on my paid for car that gets decent mileage.