Miscellaneous Transportation Deductions and Business Auto Deductions: Standard Mileage

If you use a vehicle for business use, you can deduct certain expenses associated with that vehicle. Last week we discussed one method for deducting auto expenses, the actual expense method. The other method which we’ll discuss now is the standard mileage method. We’ll also go over different types of commuting expenses and what is and is not deductible.

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The standard mileage rate for 2014 is $.056 per mile. The rate for 2015 will be $0.575 per mile. During the year, you need to keep track of the number of miles your drove for business purposes, and you multiply those miles by the standard mileage rate. In order to use the standard mileage rate, you must elect it in the first year that you record expenses for your vehicle. After the first year you can choose between the standard mileage rate or the actual expenses. However, if you lease the car for which you are claiming the deduction and you choose the standard mileage rate in the first year, you must use the standard mileage rate for the entire length of the lease. If you choose to use the standard mileage rate, you cannot expense costs for other things such as repairs, oil changes, insurance, registration fees, etc. You simply get the deduction as calculated by mileage times $0.56. However, you can still deduct parking fees and tolls paid for business purposes when using the standard mileage method. After your first year using the standard mileage rate, you should keep track of your total miles and all other expenses associated with your vehicle in order to decide which method will give you the biggest deduction at the end of the year.

There are a few instances in which you are not allowed to use the standard mileage rate. You cannot use standard mileage if any of the following apply to you and your business: you simultaneously use five or more vehicles, you claimed a 179 depreciation expense for your vehicle, you used the special depreciation allowance, you claimed depreciation using any other method besides straight line, or you used the actual expense method after 1997 for a leased vehicle.

Other costs associated with commuting for business purposes are treated differently. You are not allowed to take a deduction for any expenses incurred travelling from your home to your place of work such as taxis, buses, or gas for your personal vehicle. Even if you are working during your commute, you still cannot take a deduction. Parking fees at your place of work are also considered commuting expenses and are not deductible. However, parking fees when travelling to meet clients are a deductible expense. If you have multiple places of work, you can deduct expenses for travelling from one place directly to the other. Additionally, if you have no set place of work, but you usually work within a certain metropolitan area, you can deduct travel expenses from your home to a work site that is outside of that normal metropolitan area. If the work site is in the metropolitan area, you cannot take a deduction. If an office in your home is considered your main place of business, you can deduct transportation costs to get to other locations associated with the same business.

As you can see, transportation costs associated with your business can be a tricky subject to sift through. If you ever have a question, leave a comment so I can help you out! See you next time!

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