If you’ve started a business (or side gig), and use your car, you may be able to deduct the miles driven. If you use your car for both business and non-business purposes, you can only deduct the miles driven for business purposes.
Business miles are considered miles driven from your main place of business to other work locations. For example, if you rent an office and have to visit a client, you’re allowed to deduct the miles driven from your office to your client and back to your office. Miles driven from your home to your office are not deductible. These are considered commuting miles.
If you operate your business from your home, however, and visit clients, you’re allowed to deduct miles driven from your home to your clients.
You’re allowed to deduct business miles (also called the Standard Mileage Rate) if you choose this method the first year your car is available for business use. Meaning that you must use this method the first year you claim your car on your tax return.
You must also own or lease your car in order to use the SMR.
The following situations disallow the use of business miles:
- Using 5 or more cars at the same time (as in fleet operations).
- If you claimed a depreciation deduction for the car using any other method than the straight-line method.
- If you claimed a Section 179 deduction on the car.
- If you claimed the special depreciation allowance on the car.
If any of the previous situations apply, you must deduct actual expenses.
The burden of proof is always on the taxpayer, which makes mileage logs extremely important when it comes time to substantiate deductions taken.
A mileage log should include the following:
-Date and time of the business trip.
-Purpose of the trip.
-Miles driven on that trip.
Mileage can be tracked on spreadsheets, notebooks, apps, or any method the taxpayer chooses.
the Confident Taxpayer 