I think you're misunderstanding what I said. I wasn't talking about pro-rating mileage in my above post, but about pro-rating actual expenses. With either option, if someone uses a vehicle for any personal use at all, they can't deduct 100%, regardless of which option they choose. I'm not the tax expert, but perhaps one of those members who are will chime in here, although I suspect they're very busy this time of year. So here's my best attempt to clarify...
Here's how I understand the two options (for the record, especially for those of you who are new to this):
STANDARD MILEAGE RATE: To keep it simple, if someone drove 10,000 BUSINESS miles for 2017, they can claim a deduction of $5300 for business miles, based on the 2017 IRS standard rate of $.533/mile. (Miles driven for personal use should not be included in that total.) Expenses for fuel, service, etc. are already factored into that rate and not added. (Proper documentation of business miles is a whole other topic, but that's been discussed here many times.)
ACTUAL EXPENSES: All operating expenses, including loan or lease payments (or depreciation, however that works; I leave that part to my CPA), gas, repair, tires, routine service, etc. are all added up. Then you have to calculate what percentage of total miles driven were for business use vs. personal use. If it was 75% business use, then you can deduct 75% of the total "Actual Expenses" for that year. No per mile fees get added.
As we know, the standard mileage deduction is calculated annually by the IRS based on their assessment of average costs to operate a vehicle for that year. But an individual's actual costs may exceed that or be less than that average. When I bought my car, it was to my advantage to take actual expenses vs. the mileage deduction. Now that it's paid for and thankfully has needed very little maintenance or repair, I'm far better off using the mileage deduction vs. actual expenses - in spite of how much more we pay here for gas than in the rest of the country...  One more situation where everyone's circumstances are different, of course.
I hope that's more clear. |
