Taxpayers who use a vehicle only for business purposes may take a deduction for mileage, up to certain limits, when filing their taxes, according to the Internal Revenue Service. Taxpayers may qualify to deduct the actual expenses of operating the vehicle instead of taking the standard mileage-rate deduction.Continue Reading
Since there are two methods that can be used to figure the amount of eligible vehicle expenses, including the actual expense or the standard mileage rate method, the IRS suggests that taxpayers should figure the deduction using both methods, and then select the one that provides the biggest deduction.
To qualify to use the standard mileage rate, the vehicle in question must be owned or leased by the taxpayer, and the taxpayer must not have claimed a special depreciation allowance or Section 179 deduction. The car must not be operated in a fleet or five or more cars, and the taxpayer must use the standard mileage rate method in the first year that the car is used in the business. For leased cars, the standard mileage rate method, if chosen, must be used for the entire lease period, according to the IRS. The IRS warns that taxpayers who use a vehicle for both personal and business reasons may only deduct the cost of operating it for business use.Learn more about Income Tax