Some businesses and sole proprietors are able to deduct expenses for business use of a vehicle. There are two methods that can be used, Standard Mileage or Actual Expenses:
Standard Mileage:
· 2020 rate: $0.575 per mile
· Records should be kept for each business trip:
o Beginning Location and Mileage
o Ending Location and Mileage
· Cannot be used on a vehicle that has been depreciated on taxes previously
· Cannot be used on more than 5 vehicles at the same time
Actual Expenses:
· Must keep track of all vehicle expenses, such as gas, oil, tires, repairs, insurance, registration, etc.
· Records should be kept for each business trip:
o Location (client’s office)
o Total business miles driven
o Purpose of trip (meeting)
· Beginning and Ending Mileage must be recorded to determine total miles driven
· Dividing the business miles by total miles will give an accurate percentage of business use of vehicle
I’ve created a mileage template that is free to download, customize and use for your business. To download the template, please click the following link:
There are two tabs on the workbook, one to record standard mileage information, and another to record actual expenses. If you need assistance with filling out the mileage template, or have questions regarding the template, please don’t hesitate to contact me.
If you have any other questions, or need additional information regarding mileage, please feel free to contact me or visit the IRS at:
https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2020