The IRS has announced that the 2014 standard mileage rate will be $.56 per mile for business trips.
The 2013 standard mileage rate is $.565 for such trips.
Family child care providers using this standard mileage method may also deduct the following vehicle expenses: parking expenses, tolls, and car ferries. In addition, providers who are sole proprietors (self-employed) may claim the business portion of any vehicle loan interest and vehicle property taxes (for those states that charge this tax).
The business portion of these last two expenses is based on the number of business miles driven divided by the total miles driven. For example, if a provider drove 3,000 business miles and a total of 10,000 miles in the year her business portion is 30%.
Providers can claim business trips if the “primary” purpose of the trip is business. Primary purpose means that more than 50% of the reason for the trip is business. This includes children’s field trips, trips to the bank to deposit parent fees, and trips to trainings. A trip to the grocery could be claimed as a business trip if more than 50% of the food purchased was for the business.
Although most family child care providers use the standard mileage rate, they can choose another method to claim vehicle expenses called the actual expenses method. To use this method, providers must save receipts for all vehicle expenses such as gas, oil, repairs, vehicle insurance, repairs, tires, and so on.
Many providers underreport their business miles because they either don’t keep accurate records or they do not realize that some trips taken are deductible. Providers may use a variety of records to show their business trips: calendar notations, receipts, cancelled checks, credit or debit card statements, field trip permission forms, training certificates, mileage log, photographs, and other written records.
Therefore, it’s not too late to review your records for 2012 and record business trips on your tax return.
Tom Copeland – www.tomcopelandblog.com
Image credit: dmtbookkeeping.com
For more information about claiming car expenses see my Family Child Care Tax Workbook and Organizer.