The Internal Revenue Service (IRS) allows you to deduct mileage on your personal vehicle under certain circumstances. But you need to know what those circumstances are, and keep careful records.
For example, the IRS allows business owners using their vehicle for company business to deduct 50 cents per mile driven on their 2010 tax return. The rate also has been set for 2011 at 51 cents per mile.
You can also deduct what are called “medical miles.” These are trips to the doctor or for medical treatment. Mileage can be deducted at 16.5 cents per mile for 2010 and 19 cents per mile for 2011.
If you do volunteer work for a qualified charity, the IRS allows you to deduct mileage at the rate of 14 cents per mile, for both 2010 and 2011.
Estimates won’t cut it
But you can’t guess or estimate at the mileage. The IRS will want to see a log of the travel, made at the time the mileage is incurred. The log needs to show the mileage at the start of the trip and at the end, along with the date and purpose of the trip.
Some examples of mileage that can be deducted as business travel include:
- If you work from a home office -- driving from your home office to meet a client for business purposes
- When you drive to a bank to make deposits or other business transactions
- When you drive to pickup mail from your P.O. Box or from your UPS Store
- When you drive to the Post Office to buy stamps (for your business of course) or send business mail
- When you drive to an office supply store to make purchases for your business
The CarCheckup is a device made to provide diagnostic help for carowners. It works with foreign and domestic makes, starting with the 1996 model year. It can tell owners how the engine is performing and why, for example, the “check engine” light is on.
But the company also says it can be useful if you need to keep a log of your mileage for tax purposes.
“Consumers are equipping themselves with a gadget that lets them track and store vehicle mileage online so it’s simple to deduct from their taxes,” said company spokesman Jim Hoff.
The cellphone-sized device plugs directly into your car’s diagnostic port, required on all vehicles made after 1996 and usually located just under the steering column, and records information from the vehicle’s computer while you drive. Then, you remove it, swing out the build-in USB port, and plug it into your computer. CarCheckup will automatically upload your car’s data including the date, time, mileage and more for each trip.
Hoff quotes the IRS as saying “if you prepare a record in a computer memory device with the aid of a logging program, it is considered an adequate record."
You can check out the IRS rules on business travel here.
If you choose to deduct vehicle mileage, keep in mind that you can’t deduct gasoline purchases or maintenance expenses. However, you may be able to deduct fees and taxes, interest on your vehicle loan, and qualifying tolls and packing expenses. Check with your accountant or tax professional to make sure you qualify for a mileage deduction.