IRS Raises Business Mileage Rate for 2022
If you use your personal car for business purposes, you may be able to deduct some of the expenses associated with that use. One such expense is the mileage you rack up while driving for your business. Here’s what you need to know about claiming a business mileage tax deduction.
Examples of business use is going to meet up with your client or customer to provide your service or delivery your product. Running business errands also counts. Driving to an industry event. Driving to your business location “might” also qualify but there’s a strategy to that! See, if you can prove that your “home office” is your primary place for your business, then driving to the other location that you go to to operate your business, those miles could be considered business mileage.
For tax year 2022, the IRS raised the business mileage deduction to 58.5 cents. With the standard mileage method, you simply multiply your business miles driven during the year by the IRS’s standard rate. Using the standard mileage rate, you can also deduct related tolls, parking fees, and the business portion of interest expense on your car loan.
The other method that can be used to write off car expenses for your business is the Actual method. With the actual expense method, you can deduct the actual cost of operating the car for business. These expenses include a large percentage of your auto lease payments, gas, tolls, insurance, parking, repairs, maintenance, registration and license fees, loan interest, and depreciation. And with the new tax law, there’s also bonus depreciation which currently expires at the end of 2022 unless the Administration extends it. But as of now, beginning January 2023, the bonus depreciation will drop to 80%.
Regardless of the method you choose, you need records to support the deduction. You’ll need to keep track of your mileage under both methods, but the actual expense method requires more recordkeeping than the standard mileage method.
As a Tax Strategist, Consultant and Educator, I’ve been helping other Entrepreneurs (and Individuals) around the U.S. just like you, save thousands of their hard-earned tax dollars, increased their refunds, and solve multiple tax problems. Beyond taxes, I am your “GPS” to starting and growing your own business. Be sure to download my ebook Taxes & The New (or “Early-Stage”) Entrepreneur: What You Need to Know