Mileage and truck costs: what you can actually deduct

At tax time somebody asks how many business miles you drove last year, and the true answer is: a lot. On a return, that answer is worth nothing.

Vehicles are held to a stricter proof standard than most business costs. For an ordinary expense, a reasonable estimate with some supporting evidence can survive a challenge. For miles it usually cannot. No log, no deduction — even when the driving obviously happened.

The first drive of the day is usually not deductible

Driving from home to your regular place of work is commuting, and commuting is personal. It does not become business driving because the truck is lettered, or because the bed is full of your tools. The IRS has said plainly that hauling tools does not turn a commute into business travel. Only the extra cost of hauling something a car could not carry, such as a trailer rental, comes off.

Three situations change the answer, which is why two contractors can drive the same route and get different results:

• A qualifying home office. If your home is the principal place of business for your trade — estimating, scheduling and books, with no other fixed office — trips from home to work sites in that trade are generally business miles from the driveway on. The office has to actually qualify, which is its own set of tests.
• A temporary work location. If you have a regular work location, driving to a temporary one in the same trade is generally deductible. "Temporary" has a specific meaning tied to expected duration, not to how it feels.
• Site to site. Job one to job two, shop to supply house, job to the county building department. Business miles under any reading, and the ones people forget to write down.

These rules come from IRS guidance — Revenue Ruling 99-7 and Publication 463 — and they turn on facts specific to you. Ask your tax preparer which of the three you are in before the year starts, not after. None of this touches what you bill customers for travel: a trip fee is a pricing decision, a mile is a tax one.

Two methods, and the first year locks one in

You deduct the business share of the vehicle one of two ways.

Standard mileage rate. Business miles times a per-mile rate the IRS publishes, which changes every year and sometimes mid-year. Look up the current figure rather than trusting any article, including this one. That rate stands in for fuel, maintenance, tires, insurance and depreciation together, so none of those come off on top. It is not available in every situation; running five or more vehicles at once is one common disqualifier.

Actual expenses. Add up what the vehicle really cost for the year and deduct the business-use percentage of it. That percentage still comes from mileage, so you keep a log either way.

The order matters, and your first return with the vehicle sets it. As a general rule, if you want the standard rate available on a vehicle you own, you have to choose it in the first year that vehicle is available for business use. Start with actual expenses and claim accelerated depreciation, and the standard rate is typically closed for that vehicle for good. The other direction — standard rate first, actual expenses later — is usually allowed, with limits on the depreciation method from then on. Leases run differently: pick the standard rate and you generally stay on it for the whole lease. Check the current form of these rules before that first return, because it makes the choice whether you meant it or not.

A few costs sit outside the choice and come off under either method: business parking and tolls, plus, for the self-employed, the business share of the loan interest and of any personal property tax on the vehicle. Parking at your own regular workplace does not count.

Building the actual-expense number

Actual expenses only beat the standard rate if you know what the truck really costs. Illustrative figures for one work truck, one year — yours will differ:

Say the log shows 24,000 total miles, 19,200 of them business. That is 80 percent, so the deduction is 80 percent of the cash cost — $8,736 — plus 80 percent of the depreciation your preparer calculates.

Then run the year the other way: 19,200 business miles times the current published rate. Whichever number is larger is the one you want, if you are still free to choose it.

What the log has to contain

For each business trip: the date, where you went, the business purpose, and the miles. Plus total miles for the year, so the business percentage can be worked out.

A GPS app is fine, but check that it captures purpose. GPS knows where you drove; it does not know why, and "why" is the field that gets challenged. Photograph the odometer on January 1 and December 31 — that anchors the year's total.

Buying the truck is a different set of rules

Section 179 and bonus depreciation can write off much of a vehicle purchase up front. Dollar limits, weight rules and business-use thresholds change often, and heavier work vehicles are treated differently from cars under Publication 946. How those rules work in general is a separate guide.

The vehicle-specific part worth knowing today: take a large first-year deduction and your business use has to stay high. If it drops below the threshold in a later year, some of what you already deducted can be recaptured and taxed back. Ask your CPA which percentage you have to hold, in the year you buy — not from a forum post about a "6,000-pound loophole."

What makes the purpose column hold up

DoneQuote does not track mileage. What it holds is what makes a log entry readable later: which customer, which address, what the work was. When the purpose column says "Feldman job" and that job sits in your system with the address and scope on it, three words still resolve into a real business purpose months on. You capture the miles; the job they belonged to is already recorded.

Write it the day you drive it

Records are meant to be made at or near the time of the trip. A log built from memory in April is worth measurably less if the return is examined, and a spreadsheet of round numbers ending in zero is worth close to nothing.

If your driving genuinely repeats, a sampling approach can be acceptable: a detailed log for a representative stretch of the year, applied to the rest. The catch is the word representative — January and July are not the same month in most trades. Clear it with your preparer before you rely on it.

A note on your phone at the end of each day beats an afternoon of reconstruction in April, and it is the difference between a deduction you keep and one you argue about.