Net income provides a more accurate account of the financial status. Here’s why.
What is standard mileage rate?
The standard mileage rate is a rate set by the IRS that a taxpayer can use to calculate the tax-deductible costs of operating his vehicle for certain purposes. The standard mileage rates for 2017 are: 53.5 cents per mile for business miles driven; 17 cents per mile for medical purposes or for moving; and 14 cents per mile driven while serving charities.
Each year, the IRS sets a standard mileage rate. Tax-deductible miles must have been driven for one or more of the following purposes:
- Charitable service
If a taxpayer chooses to use the standard mileage rate to figure the cost of his vehicle for the tax year, he cannot deduct other driving-related expenses, such as oil changes and other routine maintenance costs. Many taxpayers opt to deduct the standard mileage because it’s simpler than tracking and tallying receipts for gas and maintenance.
In order to claim standard mileage on a vehicle, the taxpayer must own or lease it. A taxpayer can claim the standard mileage rate for up to four cars. Five or more cars falls into the category of fleet operation.
Standard mileage rate example
Tammy owns a 2014 Honda Accord and uses it for business purposes. She claims the mileage that she puts on the vehicle as a deduction when she files her taxes. To claim the business mileage, Tammy logs the miles she drives for work into a booklet she keeps in her car’s glove compartment.
When she files her 2017 taxes, Tammy will use the standard mileage rate for business driving, which is $0.535. Assuming Tammy drives 3,000 miles for business purposes during 2017, her total standard mileage deduction would be $1,605 (0.535 x 3,000).
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