We’ve talked a lot about can’t-miss tax deductions for the self-employed but I wanted to highlight one that can lead to major savings. That’s right, this is potentially the secret weapon for small business tax deductions.
When it comes to tracking your miles for taxes, we often talk about the mileage deduction and the mileage reimbursement. But there are other tax reasons to keep a mileage log. Let’s dive into the medical expense deduction and what role medical mileage plays. We’ll also discuss who can take this deduction, as well as what records you have to keep.
A write-off, or a tax deduction, can be quite useful for taxpayers of all kinds. It’s particularly handy for those who are self-employed, including small business owners. How does a write-off work? Let’s go over what it is, as well as some tips on how to lower your taxable income.
If you drive your car for work, you can take a mileage deduction on your taxes. Yet, many people don’t know the IRS has some strict rules on what is deductible business driving. There’s no such thing as a “commuting to work tax deduction.” But there are circumstances where your drive from home could be tax deductible. Learn about the IRS commuting rule.
Are you a business professional who has to gather all your miles to expense for your job? Do you actually have the time to record all the mileage you traveled with your busy schedule?
MileIQ was created in order to alleviate the problems associated with tracking business travel. 55 million U.S. workers have the ability to expense the miles they drive. Using MileIQ comes with features that make it extreme user friendly. At TaxConnections, we offer this app free of charge to all Tax Professionals.
The rules regarding deductions for federal income tax purposes related to business use of a personal vehicle are often some of the most misunderstood rules in the world of taxes. Generally, the costs of commuting from a taxpayer’s home to their regular place of work are nondeductible personal expenses. What “commuting” expenses then are considered deductible?
Commuting expenses are deductible when going between a taxpayer’s home and work location if:
- The expense is for going between the taxpayer’s home and a temporary work location outside the metropolitan area where the taxpayer lives and normally works.
- The taxpayer has one or more regular work locations away from home and the expenses are for going between home and a temporary work location in the same trade or business, regardless of distance, or
- The taxpayer’s home is the taxpayer’s principal place of business, and the expenses are for going between home and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.
A work location is considered temporary if employment is expected to last and actually does last for one year or less.
To determine whether the home is the taxpayer’s principal place of business, consider the following:
- The relative importance of the activities performed at each place where the taxpayer conducts business and
- The amount of time spent at each place where business is conducted.
A home office qualifies as the principal place of business if the taxpayer:
- Uses it exclusively and regularly for administrative or management activities of his trade or business.
- Has no other fixed location where substantial administrative or management activities for the trade or business are conducted.
The amount of the deductible mileage expense can be calculated using either actual expenses or the standard mileage rate. For 2013, the standard mileage rate is 56.5 cents/mile. Note that a taxpayer may convert from the standard mileage rate to the actual cost method any year. However, if the actual cost method was used in the first year the vehicle was used for business, a taxpayer cannot convert to the standard mileage rate method in a later year. Mileage logs should be maintained to document the total miles driven for the year, the total business miles driven for the year, the date the vehicle was placed in service, and the basis of the automobile (if actual cost method is used).
In summary, commuting from home to a regular or main job is never deductible. Commuting to a temporary work location or a second job from a regular or main job is always deductible. Commuting to and/or from a temporary work location and/or a second job is always deductible. Commuting from home to a temporary work location is deductible if you have a regular or main job at another location. Commuting from home to a second job is never deductible; you must have gone to the regular or main job first.
If you would like more information on how you can convert your nondeductible mileage and other expenses such as rental costs of your residence, to tax saving deductible expenses, fell free to contact me.
IRS Circular 230 Disclosure: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.