Self-employed professionals who use a vehicle for business trips were likely not thrilled when the standard mileage rate on deducting business mileage plummeted from 57.5 cents per mile in 2015 to 54 cents per mile in 2016. While the rate for 2017 is not dropping as much, it is still lower than the 2016 rate and is the second consecutive year in which this figure is decreasing.
The IRS recently announced that the standard mileage rate for tax year 2017 is 53.5 cents per mile. This rate applies to business use of a car, van, pickup truck, or panel truck.
It’s also worth noting that the 2017 rate to drive for moving or medical reasons is 17 cents per mile. This figure is down from the 19-cent mileage rate in 2016.
Remember that if you claim the mileage option as a deduction, it’s critical to properly document the business use of your vehicle. One option is to use a mileage log by tracking how many miles each business-related trip is that you drive.
Deducting Actual Vehicle Expenses
Of course, there is always the option of deducting actual vehicle expenses if you choose not to go the actual mileage route. With this method, you can generally write off the following costs incurred for business use of a vehicle:
- Vehicle depreciation
- Lease payments
- Maintenance and repairs
- Gas (including gas taxes)
- Vehicle registration fees
Choosing Your Vehicle Deduction Method
When taking a deduction on business use of a vehicle, it’s recommended by accounting professionals to make the calculations on both deduction options. That way, you can determine which write-off method will give you the biggest tax savings when filing your return with the IRS.
However, it’s important to remember that once you choose a vehicle deduction method, you’ll be locked into using that option for a few years before you can change to the other method.
To ensure you claim all business tax deductions for which you are eligible, such as the vehicle deduction, team up with 1-800Accountant today. Learn more by calling 1-800-222-6868 or by visiting www.1-800Accountant.