Claiming Mileage on Your Tax Return
Did you know that you can claim mileage on your tax return? If you use your car for business, medical, or charitable purposes, you may be eligible to deduct the cost of the miles driven from your taxable income. Let’s take a look at who can and cannot claim mileage on their tax return to determine if you should be claiming mileage.
Eligible Taxpayers Who Qualify for Mileage Tax Deduction
If you use your vehicle for business purposes, there is a good chance that you are eligible to claim mileage on your taxes. However, it is important to note that only taxpayers who are self-employed or who own an unincorporated business can directly deduct the cost of miles driven. Employees are not able to directly deduct these expenses, though they may be able to receive reimbursement from their employers if they keep accurate records of their business trips.
Mileage Rates that can be Claimed
The IRS sets standard mileage rates each year.
- For business travel 58.5 cents per mile, an increase of 2.5 cents from the rate for 2021
- Eligible active-duty members of the armed forces are eligible for 18 cents per mile traveled for moving or medical needs, an increase of 2 cents from the cost for 2021
- Anyone traveling for charitable purposes can claim 14 cents per mile. The rate is controlled by statute and remains unchanged from 2021.
The standard mileage rate for business use is based on an annual evaluation by the IRS of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on variable costs.
Limits on Claiming Mileage for Tax Deductions
The Tax Cuts and Jobs Act prohibits taxpayers from deducting unreimbursed employee travel expenditures as a miscellaneous itemized deduction. Also, taxpayers are not permitted to deduct relocation costs unless they are active-duty members of the armed forces traveling in accordance with instructions to a permanent change of station.
Taxpayers are free to determine and claim their vehicle’s real operating costs rather than relying on the established mileage rates.
The standard mileage rate is available to taxpayers. It’s important to note that they must choose to apply it the first year the vehicle is accessible for business usage. Later on, they might decide between actual expenses and the standard mileage rate. If using a leased car for business purposes, then the standard mileage rate method must be used for the duration of the lease (including renewals).
Claiming mileage on your taxes can result in significant savings if done correctly and within the parameters set forth by the IRS. If you used your car in 2022 for any kind of professional purposes, such as long-distance commuting or running errands for your business, you might be able to benefit from these deductions and drastically lower your taxable income! Be sure to keep careful records throughout each year so that when tax season around again next year, you’ll be prepared and ready to maximize those deductions!
For more information on Mileage Tax Deductions visit IRS.gov.
Of course, we’re happy to help you determine eligibility and help you gain the highest possible refund on your tax return. Contact us now to schedule an appointment.
This information is not intended as legal or tax advice. Cowdery Tax and its representatives does not offer legal or tax advice. We offer services for business bookkeeping, payroll, tax payments, and personal tax filings. We share information that is publicly available. Tax laws may change with or without notice that may alter or change the information contained in this publication.
