![]() ![]() If you want to use the standard mileage rate method in any tax year, you must do so in the first tax year you use your car for business. Actual expenses might produce a larger tax deduction one year, and the standard mileage rate might produce a larger deduction the next. The IRS offers two ways of calculating the cost of using your vehicle in your business:Įach method has its advantages and disadvantages, and they often produce vastly different results. Both taxes are based on the net profit of your business, which can be reduced by taking a deduction for the use of your car for your business. This is doubly important because you have to pay two separate taxes on your ridesharing income-once for your income tax and once for your self-employment tax (the amount you contribute as a self-employed individual to Social Security and Medicare). Taking this tax deduction is one of the best ways to reduce your taxable income and your tax burden. ![]() If you drive for a company such as Uber, the business use of your car is probably your largest business expense. The standard mileage rate for the first half of 2022 is 58.5 cents per mile and is increased to 62.5 cents per mile for the second half of 2022.Īctual expenses vs. ![]() To use the standard mileage method, keep track of the miles you drive for business throughout the tax year and multiply that number by the standard mileage rate.if half your mileage is for business, multiply by 50%). To use the actual expenses method, add up all the money you actually spent operating your vehicle and multiply that figure by the percentage of the vehicle’s business use (e.g.The IRS offers two ways of calculating the cost of using a vehicle in a business: the actual expenses method and standard mileage rate method. ![]()
0 Comments
Leave a Reply. |