How to Claim Mileage on Taxes

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Contributor, Benzinga
November 10, 2023

If you drive for work, contribute to charity, or to receive medical treatment, the mileage you put on your vehicle may prove to be a valuable deduction when Tax Day arrives. If used correctly, the mileage deduction can be a powerful tool to save money for independent contractors and small business owners alike. Do you qualify to deduct a portion of the miles that you’ve driven this year? We’ve created a crash-course packed with everything you need to know about how to best deduct your business mileage this year.

Who Can Deduct Mileage From Their Taxes?

You may deduct mileage from your taxes under two conditions. First, you need to itemize your deductions. You have two options when it comes to deducting business expenses: you may “itemize” your deductions and deduct each individual business expense, or you may take the standard deduction. The standard deduction for 2023 is $13,850 for single filers or $27,700 for married couples filing a joint return. If you choose the standard deduction, you may not also deduct your mileage. In addition to forgoing the standard deduction, you must also drive for business purposes. You may deduct mileage if you fit into one of the following mileage deduction rules or categories:

You’re an Independent Contractor Who Drives as a Job

If you own a taxi service or you work for a ride-sharing company like Uber or Lyft, you may deduct the costs of your mileage you accrue while on the clock.

You’re Self-employed and Drive to Meet Clients

If you are self-employed and you need to drive to meet clients, you may deduct your mileage costs. This can include the mileage you put on your vehicle for meetings with clients or to complete work that the client directed you to complete. For example, driving to photograph a house that’s for sale without the client’s accompaniment.

You Drive to Receive Training or Education to Improve Your Business

If you are taking a course or class to learn a new skill that will improve your business, you may deduct the costs of driving to and from relevant training courses. You may only deduct mileage if you were not reimbursed by an employer. For example, if your boss paid for a certification course and reimbursed you for your miles, you cannot “double-dip” and also deduct those miles when filing taxes.

Self-employed men and women aren’t the only ones who can deduct their mileage. You may also deduct mileage under the following categories, assuming that you itemize your deductions:

You Drive for a Charitable Purpose

Do you volunteer your time or driving ability to support a charity? You may deduct these miles so long as you were the one volunteering. You cannot deduct miles driven to drop a child off at a volunteer program.

You Drive for an Employer and Are Not Reimbursed

While your daily commute won’t qualify you for a tax deduction, you may deduct mileage expense associated with your job that your employer does not reimburse you for. You may also deduct mileage if you have to move for a new job so long as you drove over 50 miles while relocating. You can even deduct mileage you incur while hunting for a job and going to interviews!

You Drive to Receive Medical Treatment or Medicine

The mileage you accrue visiting doctors and hospitals to receive treatment or pharmacies to pick up medication is deductible. However, the costs of your medical expenses (driving and bills) need to be in excess of 10 percent of your total adjusted gross income to be deducted. If you are over the age of 65, your medical expenses only need to be in excess of seven and a half percent of your adjusted gross income.

How to Deduct Mileage From Your Taxes

Understanding how to deduct mileage from your taxes is essential for maximizing your tax savings and minimizing your overall tax burden. Follow these steps to take full advantage of this tax benefit.

You may only deduct miles that you’ve driven for one of the purposes we’ve listed above, so it’s important that you keep track of how far you’re driving and for what reason. Apps like MileIQ and Triplog can help you automatically record how far you’ve driven. Personal finance software and tax software for self-employed men and women like QuickBooks and ItsDeductible also have complimentary apps that allow you to easily input your miles after you’ve driven, creating a quick reference guide to your yearly business miles.

If you don’t know how many miles you’ve driven for business this year, consider checking your toll records or credit card statements for clues on where you’ve been. However, remember not to overestimate your mileage, as the IRS may ask to see proof of your trips in the event that your account is audited. As an example, let’s use the scenario that you are self-employed, and you drove 5,000 miles meeting clients last year. Let’s also assume that you drive 500 miles for charity in addition to your work-related mileage.

Step 2: Use the IRS’s Standard Deduction for Mileage

The easiest way to take advantage of the mileage deduction is to apply the IRS’s standard mileage rate to your itemized tax return. The standard mileage rate includes many of the expenses associated with operating a vehicle and can quickly be applied to your account. It’s also highly recommended that you use the standard mileage rate the first year that you claim mileage on your tax return because if you do not, you may not switch over to the standard mileage for that vehicle during next year’s return. The standard mileage rates for 2023 are as follows:

  • Miles driven for business: 65.5 cents per mile
  • Miles driven for medical or work-related moving: 22 cents per mile
  • Miles driven for charitable purposes: 14 cents per mile

Taking the standard mileage deduction is simple; just multiply the number of miles you ’ve driven by their corresponding rate. Then, divide the number you receive by 100 to get your deduction in a dollar amount. In our current example, you would have a deduction of $3,275 for business (54.5 cents per miles times 5,000 miles divided by 100) and a deduction of $70 for the miles you drove in support of a charity (14 cents per mile times 500 miles divided by 100).

Though the standard mileage rate covers most of the vehicle-related expenses you need to shoulder when using your car or truck for business, you probably also incurred a few other driving-related expenses that are deductible as well. Check your records to see if any of these additional deductible vehicle expenses apply to you:

  • Parking fees: Did you have to pay to park in a garage or meter while visiting a client? You may deduct the cost of parking so long as you are on the clock.
  • Toll charges: Like parking fees, you can deduct the costs of tolls that you pay while driving for business, medical, or charitable purposes.
  • Vehicle loan interest: If your vehicle is under a payment plan, you may deduct any interest that you pay at a rate that matches the percentage that you use your vehicle for deductible purposes. For example, if you paid $300 in vehicle interest last year and you use your car for business 50 percent of the time and personal usage 50 percent of the time, you could deduct $150 worth of your interest from your tax dues.
  • Accessories for ride-share partners: If your business mileage comes from a partnership with a ride-sharing service, you may deduct the cost of accessories and complementing treats you use to enhance your riders’ experiences. Snacks, cellphone chargers, tissues, and light beverages are all deductible at 50 percent the costs you’ve incurred so long as you are offering them to your riders.

These four deductions may be applied to your return in addition to your standard mileage rate, so it’s a good idea to keep track of all of your vehicle-related expenses every time you travel for work. Note that if you are taking the standard mileage rate, you may not deduct other operating costs, like gas, maintenance and repair bills, depreciation or car insurance. For most drivers, the standard mileage rate offers them more than the cost to actually operate their vehicle and is easier to calculate. However, if you drive a specialty vehicle that’s expensive to drive or uses a large amount of fuel, consult with a tax professional and inquire whether or not taking actual expenses might be a better choice for you.

Step 4: Maintain Great Driving Records for Next Year

After you’ve finished your tax return and included your qualifying deductibles, you should keep good driving records for next year to make your return easier — and to protect yourself in the event that the IRS audits you. Keep a logbook in your vehicle and write down the dates you travel, the mileage you put on your vehicle, any tolls or parking fees that you incur, and a short note on why you were traveling and what you discussed or accomplished during your time away from home.

Final Thoughts

If you are self-employed, the question of whether or not to itemize your deductions can be a tricky one. Keeping careful records of all your business-related expenses can help make the decision easier. Some of the best tax software programs even allow you to input receipts and payment records throughout the year for an easier tax season. Keeping yourself and your business organized is a great way to protect your assets and save you if you are audited.

Frequently Asked Questions

Q

Is it worth it to claim mileage on taxes?

A

Yes, it is often worth it to claim mileage on taxes if you use your personal vehicle for business purposes. By claiming mileage, you can deduct a certain amount per mile driven for business-related trips, which can result in significant tax savings. However, it is important to keep accurate records and follow the IRS guidelines to ensure eligibility and avoid any potential audits or penalties. Consulting with a tax professional can help determine if making a mileage claim is beneficial for your specific situation.

Q

How do I prove mileage for taxes?

A

To prove mileage for taxes, you can keep a detailed mileage log that includes the date, starting and ending locations, purpose of the trip, and the number of miles driven. It is important to keep accurate records and track mileage to support your tax deductions. Additionally, you can use GPS or mileage tracking apps to automatically track and record your mileage for tax purposes. Make sure to consult with a tax expert to ensure you are properly documenting and claiming your mileage deductions.

Q

Can I claim mileage if I'm not self employed?

A

Yes, you can claim mileage even if you are not self-employed. Certain professions and situations may allow for mileage deductions, such as if you are using your personal vehicle for work-related travel as an employee. However, it is important to consult with a tax professional or refer to the specific guidelines provided by your country’s tax authority to determine if you are eligible for mileage deductions in your particular situation.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.