Or as we call it, a deduction for miles driven.
The miles aren't the miles that you drive going to visit Aunt Tilly but the ones that you might use for business as a sole proprietor, or for medical or special moving situations, and for charity.
So there are three amounts of money for these.
In 2014 it was 56 cents a mile. That is not bad but in 2013 it was even higher at 56 and a half cents a mile which was a half cent higher.
Read the details of the mileage allowance and learn how you must have certain details to qualify.
A lot of people do qualify so don't be shy about it. The company that does the mileage figurations for the IRS figures that costs were higher in 2013, especially for gasoline, so the price was a half cent higher.
You will need a Mileage Log to record the miles that you are driving form odometer start to odometer finish for each trip. Download a free mileage log from this website.
If you are a sole proprietor and have a new vehicle or a newer but used vehicle you can start now. But you have to know that if you used that vehicle for the Actual Expense deduction in the past you can not.
To be a sole proprietor you have to be in business your self and you would submit a W9 form to the person paying you if the amount is in excess of $600.00. At the beginning of the next year you would get a 1099 form stating how much was expended to you by them.
They do not hold any tax money as it is your responsibility to pay taxes for yourself. You would not be using a W2 form, and you would not have taxes taken from the payment for what ever services or business that you made with the person or company that paid you. So I use this mileage allowance method for some business that I do and find it very good for a tax deduction.
For the self employed people, you can deduct the percentage of interest that you paid to cover that year as long as it represents only the same percentage of interest as the percentage of miles driven on the vehicle for the deductible purpose. If you are an employee of a business that is not the same as a sole proprietor therefore you can't deduct interest on your car loan. Be sure to read a bit about this subject before you actually get into doing this method, as you want to be sure that you qualify.
If you have any more that 4 vehicles being used on the road at the same time, you can not use the business mileage deduction. You can have 5 or 6 or more registered for business use, but can not use more that four of them at one time for mileage allowance.
There are some interesting points about this . You can take parking as a additional deduction but not fuel expense. Read the details.
Here are some deductible expenses.
l. Applicable registration fees and any taxes. (By the percentage of business use)
2. Parking fees and tolls. (During business use)
3. Loan Interest that you might have on the car. (By the percentage of business use)
You can not deduct:
1. Lease Payments
2. Actual auto expenses.
3. Depreciation as a separate deduction.
For those who can not use the Mileage Allowance method of deduction they can use the Actual-Expense method of taking a deduction for costs that are associated with the vehicle. Know how that works for you, as well.