If you drive your car for work, then you may be able to claim a mileage deduction on your taxes. A mileage deduction is a tax rebate that helps offset the cost of using your private vehicle for business reasons.
However, claiming a mileage deduction is not as straightforward as most people believe. The IRS has some strict regulations about what is or is not a deductible business drive.
In this article, we will take a closer look at the drives that can earn you a mileage deduction, and those that can’t. We will also delve into the IRS’s guidelines on deductible trips to ensure that you can make as much from your tax deductions as possible.
The IRS Mileage Rules and Commute Definition
The IRS defines a commute as “transportation between your home and your main or regular place of work.”
Right off the bat, we should clarify that there is no such thing as a “commuting tax deduction.” The IRS considers where you live a personal choice, and thus, the commute between your home and place of business a personal expense.
What Is the Standard IRS Mileage Rate for Deductible Drives?
Every year, the IRS puts out an optional mileage reimbursement rate to serve as a guide for deductible drives and business mileage.
The IRS sets this rate based on an annual study of the costs of owning and operating a vehicle in the U.S.
According to Notice 2020-05, the standard mileage rates for 2020 are:
- $ 0.575 per mile for business mileage
- $ 0.14 per mile for charity work
- $ 0.17 per mile for medical mileage expenses
- $ 0.17 per mile for military moving reasons
What Does the IRS Consider a Business Drive?
The IRS is very particular about what qualifies as business mileage. Here is a list of the drives the IRS considers to be deductible business mileage:
- Drives for business errands such as going to the bank
- Commutes to and from the airport or train station
- Trips between your home and a temporary work location
- Commutes between your regular job and a temporary or second work location
And here are the drives commonly mistaken to be deductible, but ARE NOT:
- Commutes between your home and your regular or main job
- Commutes between your home and your second job on your day off from your regular job
Note that if you have a deductible home office, then you can write off your commute as a business drive.
Tax Deductions When Driving for Charitable Work
If you drive in service of an approved charitable organization, you can claim a mileage deduction on the cost of these drives.
The IRS provides a standard mileage rate ($ 0.14 per mile) for charitable organizations to use for the reimbursement of volunteers.
Volunteers can also use this rate to claim a mileage deduction if the organization does not offer mileage reimbursement.
What Does the IRS Consider Medical Mileage?
US tax law defines medical expenses as the cost of diagnosis, treatment, mitigation, cure, and prevention of disease affecting any part or function of the body.
The IRS allows for a broader definition that covers a range of costs that may not fit into any of these categories such as medical mileage.
You can itemize your tax deductions to claim returns on a variety of medical expenses, including mileage.
Just be sure to keep track of your mileage and supporting documentation using an IRS compatible mileage tracking app like GOFAR.
Note that to qualify for medical mileage deductions, then your total medical expenses must amount to at least 7.5 percent of your gross income.
Tax Deductions for Military Moving Reasons
The IRS also allows mileage deductions for active members of the US military moving in response to a military order or station change.
In this case, you can claim deductions on the costs of driving during the move along with the other moving expenses. But in this instance, you can only use the standard IRS mileage rate ($ 0.17 per mile) to work out your deductions.
Note that this deduction is only available to active members of the US armed forces.
The Tax Cuts and Jobs Act deferred all other job-related moving deductions between December 31, 2017, and January 1, 2026.
How to Determine If Your Drive Is Tax-Deductible
Although typically your commute is not IRS deductible, there are some exceptions. The IRS commuting rules, however, can make it difficult to figure out which of these drives you can claim.
Here’s a quick guide to help you determine whether your commute is deductible:
- Commuting to and from work is never deductible
- Working during your commute will not make the drive the deductible
- A home office can nullify the commuting rule
- Driving between your home and a temporary work location is deductible
When Are Drives to Temporary Work Locations Deductible?
The IRS commuting rules don’t apply when you drive from your home to a temporary work location. But stopping by a temporary work location will convert your commute into a deductible travel expense.
A temporary work location refers to any place where you expect to work for less than one year, whether inside or outside the metropolitan area you live in.
Temporary work locations are not limited to only your clients’ offices. They can be any place where you perform work-related tasks.
Just be sure to use an IRS compatible mileage tracker to track your miles and supporting documentation in order to claim your deductions.
How a Home Office Can Make Your Commute Deductible
A qualifying home office can be an invaluable asset in helping increase your mileage deduction. It can bypass the IRS’s commuting rule that states personal commutes are not deductible. With your home also being your principal place of business, you cannot commute to work as you are already at work.
What Are the Requirements for a Qualifying Home Office?
For the IRS to consider your home as a qualifying home office, you must meet three threshold requirements. These are:
- You must use part of your home exclusively for business use.
- You must use the home office for work regularly.
- You must be in business.
On top of all this, you must also meet any one of these requirements:
- You must use your home office for business activities such as managerial and administrative work.
- You have a separate structure on your property used solely for business purposes.
- The home office is your principal place of business.
- You meet clients or customers at home.
- You store inventory or product samples at home.
- You run a daycare center at home.
With a qualifying home office, you can write off any drives to an outside office. You can also deduct the drive from your home to pick up a passenger or from dropping them off then heading home if you are a professional driver.
What Records Do You Need to Claim Your Mileage Deductions?
The IRS won’t just take your word on how many business miles you covered for that year. Without the proper mileage documentation, the IRS can even reject your deductions claim.
Prevent this by ensuring that your mileage report or mileage log contains:
- The date of your trips.
- The start and end locations.
- The business purpose for the trip.
You will also need to know how many commuting and personal miles you covered when you file for your deductions. So be sure to keep track of those too.
But tracking all these miles can be time-consuming and very tedious work. That is why you should consider using GOFAR as your mileage tracking app.
GOFAR offers you automated mileage logging with instant report exporting for tax purposes. It is also compatible with the IRS mileage rate.
GOFAR also offers you easy access to your current expense claim for faster reimbursement and tax claims.
It automatically logs each trip and allows you to tag your trips as either business or personal for a complete mileage record come tax time.
Visit gofar.co today to download their mileage tracker to get the most from your deductible drives.