Chris Jones, EA
Business miles on your personal vehicle are easy, right?
Some topics are boring, and this may be one to read if you have trouble sleeping. It should put you to sleep real fast.
When we use our personal vehicle for business, it is essential to understand a few things. This is what we're covering:
How to keep records of mileage
What kind of miles count as business miles?
When can we deduct the commute to our parked truck?
I am writing this article with the assumption you plan to take the standard mileage rate instead of tracking your actual expenses. It is much easier to track and avoids the hassle of collecting receipts for your personal vehicle.
Important note: If you want to use the standard mileage rate for a vehicle you own, you must choose to use it in the first year the car is available for use in your business. In later years, you can choose to use either standard mileage rate or actual expenses. Leased vehicles that begin with the standard mileage rate must use it for the entire lease period.
Also important: Your tractor does NOT qualify for the standard mileage rate since it has more than four wheels.
The IRS expects us to maintain records for each trip. You don't have to give the actual files to your accountant, but you want to be sure they're available in the event the IRS asks for them. Here's what they want us to record:
The business purpose
Beginning and ending odometer miles
The least expensive way is to pick up a logbook from your local office supply store. They fit in the glovebox, making them easy to record the required information. To avoid making it a pain in the butt, I don't do the math to figure to total miles until the end of the month (or year). This encourages me to capture the details with minimal effort.
What counts as business miles?
When you use your personal vehicle to get supplies or parts for your equipment, that is obviously business miles. Driving from your home in Texas to Miami Beach for a vacation is not, even if you stop at several dealerships to "shop" for a new tractor or trailer. It's pretty straightforward. Let's move on to something more confusing.
To Commute or To Not Commute
A common confusion happens when someone has to park their truck a long distance from their home. The IRS says we cannot deduct the cost/miles of driving between your home and your principal place of work (your tractor). This is commuting and is NOT allowable as business mileage.
But wait! You have a home office that qualifies as a principal place of business, right? This is where you have a desk and only use while working on your business (not your couch--more on this in a future article). If you are working at your home office BEFORE going to your other work location (i.e., your tractor), the mileage is now business miles and not commuting.
This is excellent news! Don't get crazy and claim all the mileage from your home to your truck. Be sure you have a legitimate home office and that you were indeed working on your business before leaving. This is easy to accomplish, and you should record this type of mileage as "between offices."