Standard Mileage Rate vs Actual Vehicle Expenses 2011, 2012

The IRS provides a standard mileage rate for the deduction of vehicle miles driven used in your business, you are allowed to choose between the current standard mileage rate or the actual expenses you incur from owning and operating a business vehicle.

Document Miles Driven or Actual Vehicle Expenses

You will need to calculate the difference between the two methods to see which choice would be more beneficial to your tax deduction for a business vehicle. Keep in mind, you can also claim an IRS mileage rate tax deduction for purposes other than business.

Claiming Vehicle Miles Driven Other Than Business Purposes

Online tax preaparation software, such as TurboTax, will find all of the IRS mileage tax deductions for you. Some other purposes include mileage for medical purposes, charitable driving and there are others which you can research for yourself through any quality tax preparation software program.

IRS Mileage Rate Means Keeping a Record of Miles Driven

Because the IRS mileage rate involves documenting mileage, it is typically much easier to apply. All you need are mileage logs and the current mileage tax deduction rate allowed by the IRS.

But it may not always provide the best mileage tax deduction you can get. By the time you add up all of the expenses you are entitled to for actual expenses, it’s not unlikely they will exceed the standard rate amount you could take.

Actual Expenses of Owning and Operating a Vehicle

Actual expenses include depreciation, licenses, gas, oil, tolls, lease payments, insurance, garage rental, parking, registration fees, repairs, maintenance, tire costs, etc. Expenses for personal property taxes and parking are tax deductible even if you do take the standard mileage deduction.

The standard rate looks very attractive, but it is still a good idea to run both calculations to be sure you’re deducting as much as you can.

If you will use the standard mileage deduction, you are required to use it in the first year your vehicle is in service for business purposes. There are also situations for which the tax law prohibits a vehicle user from taking the standard mileage rate.

When To Deduct Actual Vehicle Expenses:

• If the owner uses five or more vehicles in a business;

• If a Section 179 deduction was taken on the purchase of the vehicle;
• If the vehicle is leased and the actual expenses have ever been used to calculate the deduction.

Making a careful and wise decision about how you calculate the IRS standard mileage tax deduction you take for vehicle usage can save you a lot of money on your taxes. Do the right thing for yourself.

You'll find everything you need at TurboTax Online to help you maximize your vehicle tax deductions and credits whether you choose the standard mileage rate or the actual vehicle expenses tax deduction.