The IRS announced that the standard mileage rate for 2010 will be decreased to 50 cents per business mile. This is a significant reduction from the 55 cents allowed in 2009. According to the IRS, “The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.”
So, when can you deduct business mileage? Driving to client meetings, industry conferences, or running business errands are all legitimate business trips.
There are two ways to claim business deductions for automobile use: the standard mileage deduction (now 50 cents per mile) or a percentage of actual costs incurred during the year. Actual costs would include gasoline, insurance, repairs, parking, lease payments or depreciation, and vehicle registration fees. Generally, unless you drive your car relatively few miles each year, with most of those miles being allowable business miles, you’re better off basing your deduction on the standard mileage rate.
Regardless of which deduction method you choose, be sure to keep an up-to-date vehicle log of your miles driven!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.