No matter what kind of business driving you do, whether you are driving for Lyft, Uber, or another ride-sharing company, your own business, or you work as an independent driving for a truck, you need to know and understand the Internal Revenue Service or IRS standard mileage rate for the year in doing your business tax return. The IRS releases updates for taxpayers and the best way to get informed is to always visit their website.
For the year 2020, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) are the following:
- 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019,
- 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019, and
- 14 cents per mile driven in service of charitable organizations.
For the year 2021, are the following:
- 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
- 16 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, down 1 cent from the rate for 2020, and
- 14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020.
If you are filing your tax return this year 2021, use the 2020 standard mileage rate for the year 2020 of your tax return, not the 2021 standard mileage rate. Accuracy for your business taxes is crucial to avoid any red flags from the IRS.
Keep in mind that business mileage rates are for business driving purposes only and any personal uses are not deductible. There are two methods in computing the mileage deductions, the other one is the Actual Expenses Method and it depends on which one you will use. Tips on Calculating Mileage Deductions will show you what is the difference between the two methods.
And lastly, after your computation, you can now add your business mileage expense to your tax return.
- For small businesses, you refer to Schedule C-form-1040, and on the form (PDF file), look for PART II No. 9 Car and truck expenses, and enter the amount.
- Next, go to PART IV: Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 — Depreciation and section 179 expense deduction (not included in Part III) — to find out if you must file Form 4562.
You have to keep an accurate logbook for the entire year of all your business travel to have the best proof to support your deductions claims on your business mileage. Using an online mileage log maker is more beneficial as you get the maximum deduction you deserve. No more incomplete logbook that tends to forget to log by some of your employees. They can log the details in a minute, fast, easy and accessible.
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