2017 Personal Vehicle for Business Purposes, Tax Deduction & Mileage Rates

 

Are you using your personal vehicle for business purposes, moving or medical purposes, or as transportation to and from a charitable cause and looking to offset some of that cost through a tax deduction? Make note, as these new rates for 2017 published by the IRS are now in effect!

The Standard Mileage Rate is an amount determined by the IRS each year to determine the amount of eligible driving-related deductions an individual may claim. This rate is calculated by the IRS based on annual studies of fixed and variable costs of operating an automobile.


2017 Standard Mileage Rates

 

Business Mileage: 53.5¢ per mile
 

Self employed individuals and businesses can deduct these miles when traveling for business purposes such as meeting with a client, or traveling to individuals or businesses for the purpose of conducting or facilitating business. Business owners who are self-employed working out of their home can expect all miles to be deductible when visiting clients and traveling for other business purposes.

Employees typically do not deduct miles unless they are traveling in their personal automobile to visit clients and are not reimbursed by their employer at the full mileage rate already. Mileage to/from your office are considered commuting miles and are not deductible.

Any vehicle counts, but as all of this information must be explicitly listed on your tax return, GLA provides clients a worksheet to facilitate the filing process. Have more questions about deducting business miles or other business expenses? Click here to contact us and we'll be happy to help!


Moving & Medical Mileage: 17¢ per mile


Individuals moving to their primary residence greater than 50 miles for a new job or business may deduct the mileage from driving. Also note that there are other moving expenses in addition to miles that may be deductible under Schedule A.

Medical miles may be deductible when traveling for medical purposes for yourself or any other individual listed on your tax return (spouse and dependents).

Contact us if you have recently moved or have questions about deducting moving or medical expenses on your tax return.


Charitable Miles: 14¢ per mile


All miles driven in service of a charitable organization or to/from charitable activities specifically for volunteering (Feed My Starving Children, Habitat for Humanity, Meals on Wheels, etc).


DEDUCTING MILEAGE vs ACTUAL EXPENSE


Most individuals which drive 8,000+ business miles in a given year will use the standard rate for deducting mileage. Here's an example of why that might happen:

Sample: 10,000 miles, 8,000 business, 2,000 personal

 

Standard Rate Deduction

8000 * 53.5¢ / mile = $4,280.00
Parking & Tolls = $20 * 12 mo = $240.00
Total = $4,520.00

 

Actual Expense Deduction

(Business Use 80%)

Fuel
Maint/Repairs
Registration
Insurance

$1500
$1000
$100
$1000

$3600
$2880
$240

Total Actual
*80% Usage
Parking & Tolls

Total Actual Expense Deduction

$3,120.00


As illustrated, the calculation based on the standard mileage rate provides a greater deduction. We provide our clients with a Mileage vs Actual Expense worksheet to help us calculate the difference between the two methods to ensure our clients receive the most deduction for their activity.

Get started with GLA today!