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A Self-Employed Guide To The IRS Mileage Rate In 2023 vs 2024
A Self-Employed Guide To The IRS Mileage Rate In 2023 vs 2024
For self-employed individuals, mileage deductions can significantly lower taxable income, leading to big tax savings. But to get the most out of these deductions, you need to be on top of tracking and calculating every mile you drive.
With the IRS enforcing strict rules about keeping detailed records, frequent mileage tracking can be a game-changer. It’s also important for gig workers (Uber Eats drivers, Lyft drivers, Doordash drivers, Postmates drivers) and self-employed individuals who use their vehicles a lot to keep up with the latest news about mileage deductions.
This guide will take you through the IRS mileage rate for 2023, the IRS mileage rate for 2024, how to calculate your vehicle mileage both manually and with a mileage calculator and vehicle-related deductions that can reduce your self-employment taxes.
Table of contents
What is the current IRS mileage rate?
The IRS standard mileage rate for 2024 is set at 67 cents/mile for business use. The rates change every year as they are adjusted for inflation. The federal mileage rate for business covers more than just gas—it can include repairs, insurance and other related expenses. For medical or moving purposes and charitable work, the rate is generally lower, as these trips are made for different reasons.
How to calculate mileage for 2024?
There are two ways self-employed individuals can calculate mileage – the standard mileage method or the actual expenses method.
Standard mileage method
Actual expenses method
What counts as business mileage?
Tracking mileage with a mileage log
Keeping a solid mileage log is key when it comes to playing by the IRS's rules. It's all about making sure you've got the right numbers on how many miles you've clocked up for work, medical trips or doing good deeds. Having a good log not only helps you claim mileage deductions with the current mileage rate but also reduces the chances of any IRS hassle down the road.
So, what should you include in this log? Firstly, the date of each trip. That way, you've got a clear timeline of where you've been and when. Don't forget to mark down why you were hitting the road – whether it was for work, getting to the doctor's or lending a hand. For work trips, make a note of the purpose of the drive.
You'll also need to keep track of how many miles you've driven. You can either note the starting and ending mileage for each trip or just write down the total miles. Be sure to include both the starting point and your destination – it helps give context to your trips. If you paid any tolls or parking fees along the way, it's worth making a note of those too, even though they're not a must for mileage deductions.
Make a habit of updating it regularly to avoid missing anything or making mistakes. Whether it's a quick scribble every day or a weekly catch-up, staying on top of it keeps your records accurate and up-to-date.
When it comes to organizing your log, keep it simple. Group things by date and what the trip was for. It makes sorting out your taxes a breeze and means you can easily lay your hands on specific records if you need it.
Self-employed individuals can also consider using a mileage tracker app. They do all the hard work for you, plus they often come with extras like backing up your logs in the cloud so you don't have to stress about losing your records. The IRS recommends keeping these logs for at least three years from when you file your tax return.
Mileage-related tax deductions
With the current IRS mileage rate, using tax deductions to lower taxes can be an easy way for self-employed individuals and gig workers like Amazon Flex drivers and Grubhub drivers to keep their tax bill low.
For an expense to be considered a tax deduction, it has to be “ordinary and necessary” in your line of work. For example, delivery drivers can write off the cost of gas because it’s a significant part of their job. A 1099 tax calculator can be a good way to find more business deductions.
FlyFin’s expert CPAs provide unlimited tax support for self-employed individuals looking to maximize savings and minimize tax season stress. They can answer questions about the IRS mileage reimbursement rate and prepare and file your returns for you. AI also scans your expenses to find all your tax deductions.
What’s FlyFin?
FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors.
But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology.
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