How To Claim Gas Mileage Deduction for a Small Business

For a small business owner, every little bit of savings counts. It is not easy to run even a small business. Aside from relevant cost cutting measures, you can also get additional savings from valid deductions on your income tax returns, provided you know how the procedure works and what you have to do to qualify for these business deductions.

The IRS provides standard mileage rates which can be availed of when computing gas mileage deductions by employees, self-employed individuals and other taxpayers such as a small business owner, for legitimate use of automobiles for business, charitable work and medical and moving purposes. The standard mileage rates vary from year to year.

1.    For 2009 beginning on the first of January, the standard mileage rates are as follows:

  • 55 cents per mile driven for business purposes
  • 24 cents per mile driven for moving or medical purposes
  • 14 cents per mile driven for servicing charitable institutions

2.    You cannot claim gas mileage deduction when you travel from your home to your place of business. The gas mileage deduction is only applicable to vehicles used in the conduct of business, such as going to and from a client’s office or business meeting, transporting tools and products from your office to a customer and when you are running errands that directly affect the conduct of your business.

3.    You should keep a log of all business-related trips, the dates and purposes of the trips, the start and ending mileage as well as gas receipts as proofs to be attached to your income tax return.

4.    To compute how much deduction you are likely to get, take the standard mileage rate applicable to your business and multiply that with the business mileage you incurred for the week and then multiply that with the number of weeks for the applicable taxable period.

5.    The types of transportation included in the standard gas mileage deduction are cars, vans, as well as panel and pick-up trucks.

6.    You can use the standard mileage rate for a car or truck that you own for the first year that it is used for your business. In succeeding years, you may opt to use actual expenses rather than standard mileage rate. If you are using a leased car, you must apply the standard mileage rate for the whole time that the car is leased to you, including lease renewals.

7.    You may also deduct toll and parking fees for business errands together with the standard mileage rate, but as separate items.

8.    Claiming gas mileage tax deductions is only applicable if your business maintains up to 4 vehicles.

9.    You cannot claim gas mileage deductions if you use the vehicles for hire such as taxicabs or if you lease or own more than 4 vehicles.

10.    The annual business mileage during a calendar year should not be less than 6,250 miles. You get this by multiplying the annual business mileage by the business use percentage. You can compute the business use percentage by dividing the annual business mileage by the annual mileage. It should not exceed seventy-five percent to qualify.

It is your right to claim all the tax deductions that are available to you. Just ensure that when you claim the tax deductions, such as gas mileage, you have all the proof and documentation to substantiate your claim. Failure to do so will make you a good candidate for a tax audit.


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