If you frequently drive your personal vehicle for work-related purposes, it’s important to understand how to claim your business mileage expenses as tax-deductible and report them in your annual IRS tax return using IRS Form 1040. This article will guide you through the process, with a focus on the widely used Standard Mileage Rate method, and introduce you to MyCarTracks, a mileage tracking app that simplifies mileage logging and reporting.
What You’ll Need
To get started, make sure you have the following:
A personal vehicle registered in your name, as business use of your personal car, van, pickup, or panel truck is tax-deductible. Note that you cannot claim business mileage expenses for a company car. Different rules apply in that case.
A mileage tracking app that reliably tracks all your trips and keeps a comprehensive mileage logbook of your vehicle. Look for an app that automatically records trip details, including departure and arrival times, full address information, vehicle details, and trip purposes. MyCarTracks is a trusted and efficient mileage-tracking app that simplifies the process with its accurate and compliant record-keeping features.
Familiarity with IRS Form 1040 – Schedule C, where you’ll report your business mileage expenses under “car and truck expenses” along with relevant vehicle and mileage details.
How to Record Business Mileage
Use a mileage tracking app like MyCarTracks to effortlessly record all your trips. Categorize your mileage into three main categories:
- Business Miles: This includes driving related to performing services for clients or customers, traveling to and from business meetings, purchasing business supplies, and other self-employment-related tasks. If you use your vehicle for charity, medical, or moving purposes, you can also report those miles as “business miles” on IRS Form 1040, but use the appropriate rate per mile designated by the IRS for such purposes.
- Commuting Miles: These are the miles driven between your home and your regular place of business. Commuting miles are not tax-deductible as they are considered personal travel expenses.
- Personal/Other Miles: This category covers non-business and non-commuting miles.
Download MyCarTracks and start tracking your mileage now
Using the Standard Mileage Rate Method
The simplest way to calculate your business mileage expenses for IRS Form 1040 is by using the Standard Mileage Rate method. The IRS sets the standard mileage rate annually, and for 2023, it stands at 65.5 cents per mile.
Under this method, you replace your actual vehicle expenses (such as depreciation, lease payments, maintenance, and repairs) with the standard mileage rate. However, business-related parking fees and tolls can be deducted in addition to the standard mileage rate. Parking fees at your main workplace and commuting-related tolls are considered personal expenses and are not deductible.
Reporting Business Mileage to the IRS
When reporting your business mileage expenses in IRS Form 1040 – Schedule C, gather the necessary information from your mileage tracking app:
- Total miles logged with your vehicle during the year.
- Total business, commute, and personal miles.
- The date when you placed the vehicle in service for business purposes.
Fill in the appropriate sections of IRS Form 1040 – Schedule C as follows:
- Line 9: “Car and truck expenses” – Enter the total expense amount of your business mileage, calculated using the standard mileage rate. Your mileage tracking app should provide this figure based on the standard mileage rate.
- “Part IV: Information on your vehicle” – Provide the required vehicle and mileage details based on the report generated by your mileage tracking app.
Remember to review the detailed instructions provided by the IRS for filling in Form 1040 to avoid errors. If you have any uncertainties, consult with your accountant or tax professional.
It’s crucial to maintain accurate and detailed records to support your claims, as the IRS may request documentation. MyCarTracks generates mileage expense reports that serve as comprehensive records, providing the necessary evidence for your tax return forms.
Simplify the tracking and reporting of your business mileage expenses with MyCarTracks. Download the app today and enjoy the benefits of accurate mileage tracking and seamless IRS Form 1040 reporting.
