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Betty W. Stark

Guide to Mileage Deductions for Business Travel

As car costs soar, business travelers scramble to get the most per mile


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Forget sticker shock. Business travelers now reel from pump shock, that agitated state that occurs every time the gas pump dings and the cost per tank-full clangs like three-across on a Vegas slot machine.

Unfortunately, there are no real winners at the gas pumps or on the road, but if you drive for business there are ways to make sure that you are

  1. Maximizing your mileage deductions
  2. Filling up at the lowest price in the market
  3. Keeping very, very good records for the IRS

Action Steps
The best contacts and resources to help you get it done

Know ahead of time what the IRS allows


The IRS has specific rules for which expenses-per-mile you can--and can't--deduct. If you're audited, it will be up to you to prove that your declared expenses are legitimate and documented. Knowing the rules ahead of time makes it easier to keep and organize the paper trail required for each road trip.

I recommend: The IRS spells it out, at length. Look for the rules governing allowable car expense deductions, along with specific examples, beginning on page 15 in Publication 463.

Track expenses and organize receipts


The IRS will want proof of your miles driven or your actual expenses (you can deduct only one of the two). It's more important THAT you keep careful records than HOW you do it. Low-tech or high, the more organized your records, receipts and supporting documents are at tax time, the better.

I recommend: If you're a techie, consider tracking your expenses on your PalmPilot, download the free Gas Mileage MPG Tracker or test-drive MileTracker Pro software. If a simple log book or filing system is more your style, look into Office Depot's log book, storage and filing systems.

Find the lowest gas prices where you'll be driving


Wandering from gas station to gas station at an unfamiliar destination is definitely counter-productive and costly. Know before you go where gas is cheapest.

I recommend: Log on to detailed gas pricing information and enter the zip code(s) of the places where you'll be doing business.

Get professional help


If you lack the time or the inclination to decipher all those IRS regulations on deducting car expenses, get professional help.

I recommend: Find a CPA firm in or near your home base zip code, talk to a tax specialist at H&R Block or contact the friendly folks at the IRS.

Tips & Tactics
Helpful advice for making the most of this Guide

  • Don't put off organizing your car receipts. Doing it automatically after each road trip is a lot easier than scrambling at tax time.
  • The IRS's Publication 463, while lengthy, has several useful examples of strategies for deducting mileage.
  • Don't forget to keep track of rental car expenses too. If they are business-related, they are most likely deductible.
  • Gas prices can vary dramatically between bordering states. If you're doing business in a state that tacks on a hefty gas tax and it's adjacent to a lower tax state, consider crossing the border to fill up if it's geographically feasible.
  • Even if you use a professional to prepare your tax returns, know the basic rules that govern mileage deductions. You'll drive smarter throughout the year if you do.

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