April 20, 2021
You have 2 choices when it comes to deducting auto expenses for your business-
The Standard or Actual Deduction.
The Standard mileage rate has gone down in 2021 to 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020. To use this method, you multiply your business miles driven by 56 cents to get the amount of your deduction.
The Actual expense option adds up all the car payments, repairs, insurance etc. used for your business. This means you add all that up and multiply by the percentage driven for your business to get the amount of your deduction.
Almost always, the actual will be a better option. And now with such high gas prices and a lower standard deduction, the actual expense method might save you the most money!
Disclaimer: For informational purposes only. Not Tax or Legal advice.