In July taxes may be the furthest thing from your mind. In 10 Important Tasks for Your Mid Year Checkup I reminded everyone to assess their tax situation. Here’s a tax question that came up recently. With sky high gas prices, it could be a situation that affects many of you.
Using Your Personal Car for Work
A reader, Kyle, accepted a new job last month. The company requires that Kyle use his personal car for work:
Typically I am driving 200 miles a day and I am reimbursed by the gas price divided by 30 cents per mile plus $400 a month (roughly 23 cents a mile). I see that the IRS acknowledges about 50 cents per mile as cost. Is the roughly 27 cents per mile tax deductible for me next year? – Kyle
IRS Mileage Rates
Mileage Rate Increase in 2008. The first thing Kyle should know is that the IRS raised the mileage rate as of July 1 for the remainder of 2008. The first six months of 2008 will be at 50.5 cents per mile and the last six months of 2008 will be at a 58.5 cents per mile. For anyone computing business mileage, you will need to make two computations – one for each part of the year.
Update: Here are the updated standard business IRS mileage rates for each year since I answered this question:
- IRS mileage rate 2009: 55 cents per mile.
- IRS mileage rate 2010: 50 cents per mile.
- IRS mileage rate 2011: 51 cents per mile through June 30, then 55.5 cents per mile.
- IRS mileage rate 2012: 55.5 cents per mile.
- IRS mileage rate 2013: 56.5 cents per mile.
- IRS mileage rate 2014: 56 cents per mile.
- IRS mileage rate 2015: 57.5 cents per mile.
- IRS mileage rate 2016: 54 cents per mile.
- IRS mileage rate 2017: 53.5 cents per mile.
Deducting Employee Business Mileage
Yes, Kyle can deduct the unreimbursed portion of business mileage (approximately 27 cents per mile in Kyle’s case before the increase). Because Kyle is an employee, the mileage is classified as an employee business expense.
The deductible mileage is only for business travel and does not include commuting miles (from home to your main place of business and return).
How to Report Employee Mileage on Your Taxes
Unfortunately, Kyle can only deduct the mileage if he is itemizing his deductions. If he takes the standard deduction, he’s out of luck. In addition, because employee mileage is a miscellaneous itemized deduction, the deduction is only for any amount above 2% of AGI.
If Kyle plans to itemize and he passes the 2% floor, he can use Form 2106 to calculate the deduction as follows:
Compute the number of business miles multiplied by the IRS standard mileage allowed amount. Subtract the reimbursement you have received from your employer. The remaining amount will carry forward to Line 21 on Schedule A.
You can take your mileage tax deduction when you file online using TurboTax.
I took a business trip in my POV yesterday, but with the total trip only being about 2 miles I didn’t record it. Almost every business trip I take gets combined with a personal trip, which makes tracking them extremely difficult. I usually only make trips to the post office or bank, which are both on the way home from my day job. It’s just easier combining trips than recording them to save a couple bucks at tax time (at least in my situation).
Don’t forget mileage to/from medical events, as well as parking fees! Long ago I recorded roundtrip mileage for all the places we visit, and now, at the end of the year I do a report in Quicken and can easily total mileage, fees.
Obviously, the value of tracking this depends on your personal situation.
Thank you Madison! I really appreciate the effort you have put into this website and my question.
It’s great to know that mileage can be deducted. I like this site! It’s loaded with helpful information.
Great question and Thanks for the work here to get the answer. That is what I found out in the past when trying to deduct excess work mileage. The problem is the 2% floor. You have to do a lot of driving and still lose $2000 on a $100K income. At least you might get something but that is a huge hit. My employer only reimburses for less than $0.40 per mile. I have to drive a ton before I could deduct anything on my taxes. And as we all know, the IRS isn’t exactly generous with the $0.58 per mile number.
Thanks for the include. Figuring mileage and what’s deductible (and more importantly, what’s NOT) is sometimes a pain. My company is still stuck at the Govt. per-diem rate, which is trailing the IRS rate by $.08/mile. I may have to deduct it next year on taxes, separately.
@ George and Randall: It sounds like lots of companies aren’t keeping up with the IRS rate. That’s unfortunate, especially with gas prices so high.
Is it ok to round up to the nearest mile?
I’ve struggled with mileage tracking for years and years – tried about 100 apps and nothing ever really did what you would “think” they’d do. BUT… I bought The Mileage Ace about 6 months ago and I would recommend this to everyone. It’s the first mileage tracker I’ve ever seen that truly captures every single mile, and it does it totally automatically. You owe it to yourself to at least go check it out – it’s about 100x better than any app I’ve seen and it pays for itself because every single mile is logged.
what can i deduct i drive from my house to an office that i clean then drive to my regular job then to another cleaning job then back home