Company Mileage Reimbursement Vs. IRS Mileage Reimbursement

File a 1040 tax form if you deduct business expenses.

There are two ways to claim expenses on your income taxes for business use of a car; the standard mileage rate method and the actual expenses method.The standard mileage rate uses the IRS mileage calculations.

Standard Mileage Rate

If you use the standard mileage rate method, you can deduct parking and toll fees that you paid while on business in your car. To qualify for this method, you must own the car, it cannot be used as a taxi or to transport goods for hire and you must choose this method in the first year that your car is used for business.

Leased vs. Owned Cars

Leased cars use the standard mileage method throughout the lease period. You can change to the actual expenses method later, for a car that you own.

Actual Expense Method

The actual expense method requires that you determine the business portion of your car usage. You must calculate the exact amount it costs to operate the vehicle.

Deductions

With the actual expense method, you can deduct oil, gas, tires, insurance, registration, repairs, licenses and depreciation, but only for the business miles on the car.

Warning

Keep careful records. If you are audited you must prove your expenses. IRS Publication 463 has the current IRS standard mileage rate.

References

• Internal Revebue Service: Business Use of Car