Mileage – Is it Business or Commute Miles?

Mileage for 2012 is 55.5 cents for each business mile. Do you know the difference between business and commute miles? If you are confused, you’re not alone!

First, do you have a home office? If “yes” then any time you leave the house for business reasons, the miles are deductible. If the answer is “no” – your first stop whether the office or client is commute miles, the remainder are business miles until your last stop home which are commute miles again.

You will need three numbers for tax purposes:

1. Total miles driven during the year. At the beginning and end of the year write down the odometer reading.  At the end of the year subtract the difference. This will give you the total miles driven.
2. Commute miles driven during the year. This includes miles to and from a regular W2 job, as well as miles from home to the first stop and for the last stop to home if no home office.
3. Business miles driven during the year. Make sure you keep a daily log of some sort – a small weekly calendar where you can record the business stops along with the miles driven. In this log you will need to record: the date, destination, purpose for trip and business miles driven.

If the primary reason for the trip is business, but along the way you stop at the post office, gas station, and grocery store you do not need to record these stops. All the miles for this business trip are deductible. However, if the personal stop is out of the way stop, then your business miles stop with the last business stop.

*Your other option is actual expenses – you not only need to keep the above log for business mileage but also all receipts for gas, repairs, etc, Total expenses will be deducted at the % rate of business over total miles. It usually works out better to take the 55.5 cents per mile.