You know what they say: More Miles, More Money!
Ok, maybe only tax pro’s say that. If you use your vehicle for work (and you’re self-employed) then you’ll be able to deduct your auto-related expenses.
Mileage is a big deduction. Even if it doesn’t seem like much, it really does add up.
If you drive from your office for a job related trip such as a sales meeting, to get office supplies, or to the airport, those miles are typically deductible.
For the first half of 2022 the standard mileage rate was 58.5 cents per mile and increased to 62.5 cents per mile for the last half of 2022. However, there’s a separate table for those who lease their vehicles. If you are self-employed, you may either deduct your actual expenses or use the optional standard mileage rate to calculate deductions provided you used the standard mileage rate in first year that you used the auto for business. Otherwise you will need to use the actual expense method.
If you’re using your vehicle 75 percent of your time of use for business, that same percentage of all of your qualified auto expenses are deductible. If it’s a car used exclusively for business, it’s 100 percent. If you’re claiming actual expenses, things like gas, oil, repairs, insurance, registration fees, lease payments, depreciation, bridge and tunnel tolls, and parking can all be deducted. Just make sure to keep a detailed log and all receipts and keep track of your yearly mileage and then deduct the percentage used exclusively for work.
Bonus tip: If you are self-employed and claim a dedicated home office (a space set aside exclusively for business) the driving you do from your home to client’s office or jobsite is deductible.
As always, be sure to discuss these with your tax professional. If you’d like to hear more tax tips, be sure to schedule an appointment to discuss your tax planning options!