How to Deduct Car Expenses and Mileage the RIGHT Way

Trying to deduct car expenses in your business, but don’t know how? Read on to learn how to do it right.

Released just this month! The mileage deduction rates for business driving expenses has risen to 70 cents per mile.

You can claim deductions for your business vehicle under the mileage or expense methods.

The Mileage Method

To use the mileage method: If you’re driving a vehicle for your business, you can only claim this deduction when the trip is for business purposes. I recommend tracking using an app like TripLog or Everlance to keep track of miles. Remember to document why you travelled. If meeting a client, write that down and specify which client. If you’re moving inventory from one business location to the other, jot it down. You can use a paper log, notes in your app, or the transaction notes in your accounting software (Everlance and TripLog both integrate with Quickbooks, on certain subscription tiers).

The problem with the mileage method is you can’t deduct driving from your home to your office because that is just commuting to work. It’s the same driving an employee would do. Toll road fees, parking, and similar expenses also can’t be deducted if they are just for commuting. They can, however, be deducted when travelling from one workplace to another (like meeting clients), if you are self-employed or running your own business.

Deduct Car Expenses with the Expense Method

The expense method is your other option. Here, you deduct all expenses related to your vehicle, forgetting about miles. 

Now with either method, keep in mind that you must use it consistently the entire tax year. That means you can’t just switch from mileage method to expense in March just because you suddenly need to make repairs.

To keep track of your expenses and have a second set of eyes on your books, contact me for a bookkeeping evaluation and strategy call. I can save you 80+ hours a year on your bookkeeping, compared to doing it all alone.

Disclaimer: Allen Bookkeeping Solutions LLC is a non-CPA bookkeeping and accounting service. It is not an enrolled agent or attorney. This material has been prepared for informational purposes only.