What to pay attention to when deducting your mileage if you’re self-employed

Last updated on January 3, 2023

Have you been thinking about starting a business? Are you self-employed? Then we’re sure you came across the fact that you can deduct your business-related mileage on your tax return.

Or, if this is news for you…well, it’s time to celebrate!

You do need to pay attention to the administration. You have to keep a few legislations in mind, but not too much in a special case, which we will explain later.

But first, let’s summarize the most important facts.

If you’re self-employed, a freelancer, or a rideshare driver you must file a 1099’s and need to keep track of your mileage. You need to choose a method on which your deduction will be based. And choose carefully, as you can’t change your mind for at least a year.

Standard Mileage Rate

The standard mileage rate is also known as the mileage per diem or deductible mileage. It is a rate set by the Internal Revenue Service (IRS) per mile driven by a taxpayer for business or any other deductible reason such as charitable or medical purposes. For 2023, the standard mileage rate for the cost of operating your car for business use is 65.5 cents per mile. This number for the second half of 2022 is 62.5 cents per mile. If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use either the standard mileage rate or actual expenses. You cannot use this method however in the following cases:

  • You use five or more cars at the same time (such as in fleet operations);
  • Claimed a depreciation deduction for the car using any method other than a straight line;
  • Claimed a section 179 deduction on the car;
  • Claimed the special depreciation allowance on the car;
  • Claimed actual car expenses after 1997 for a car you leased.

Also, there are a few more things you can’t do:

  1. You cannot deduct any operational expenses (gas, maintenance, etc.). You can still deduct parking and toll expenses.
  2. You cannot switch methods (Standard Mileage Rate to Actual Expenses Method or vice versa) in the same year.

Actual Expense Method

You can still use the actual expense method, where you can deduct all your actual car expenses, including depreciation, licenses, lease payments, registration fees, gas, insurance, repairs, oil, garage rent, tires, tolls, and parking fees.

Sounds good, doesn’t it?


So how to keep track of all of this?

The best way is to continuously track your trips (and collect your refueling receipts as well!). It can be tricky, time-consuming, and monotonous when done on paper. And if you forgot to log something or if you accidentally miscalculate a few numbers, you could be facing a tax penalty.

Track your mileage with MileageWise and avoid penalties

With the MileageWise mileage tracker app, you no longer have to worry at the end of the month about where you’ve been. You can easily track your trips and refuelings on the go. You only need to launch the app when you arrive at a particular location. The app recognizes which client you are at. You only need to approve it with the touch of a button!

But more than that, with our web dashboard and app working together, you can make up for the forgotten drives as well (who hasn’t forgotten to log a trip once or twice?) with the help of our AI Wizard feature, when using MileageWise if you give us a few parameters, like the basis for your payoff (your end of the month odometer reading or the business mileage you’ve driven) we can make you a recommended, personalized mileage log, which will correspond with the exact mileage you have driven according to your odometer, even retrospectively. In the process the Built-In IRS Auditor checks and corrects 70 logical conflicts, so your mileage log will be IRS-proof without a doubt, meeting every expectation.

But if you’re still worried that you can’t keep track of your mileage, outsource it to our experts. They will be more than happy to help!

And if you are already using another mileage tracker app, you can import your already logged trips to MileageWise, which the software will perfect by correcting 70 logical conflicts, when making you a recommended log of your taste.

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