If you own a motorcycle and use it as a primary business vehicle, you may be able to take a mileage deduction on your taxes. However, taking a motorcycle mileage deduction is different from the IRS Standard Mileage Rate and you won’t be able to apply the standard mileage rate to your motorcycle. It's important to keep detailed records of your expenses in order to calculate the actual amount you are able to deduct.
Does calculating your own deduction and keeping track of all that data sound intimidating? Don’t panic, there are ways to manage your data that will simplify the process significantly come tax season. Here we’ll discuss the steps you should take to make sure you maximize your motorcycle mileage deduction.
The Difference Between Motorcycles and Vehicles for Tax Purposes
The reason that you can’t apply the standard mileage rate to your motorcycle is that motorcycles are inherently cheaper to operate than vehicles. The standard mileage rate applies to cars, pickup trucks, vans, panel trucks, and SUVs, but not to motorcycles. Allowing motorcyclists to use the same mileage rate as motorists would give them an unfair tax windfall; therefore, motorcycles are treated differently by the IRS than other motor vehicles. While there has been talk within the IRS about establishing a standard motorcycle mileage rate, that talk has yet to materialize as an actual figure. Until it does, it is important to keep detailed, organized records of your expenses so that it is easy to calculate (and maximize) your deduction.
Types of Deductible Expenses
Naturally, your motorcycle mileage deduction hinges on your mileage; it is crucial to track how many miles you ride for business and for pleasure so that you can calculate the percentage of time you use the motorcycle for business purposes. There are a variety of methods you can use to track your mileage, from apps that automate and simplify tracking and record-keeping to more old-fashioned methods like writing down your mileage in a notebook.While applications and other services can take a lot of the guesswork out of mileage tracking and record-keeping, as long as you are tracking your expenses you’re on the right path. In addition to your mileage, you’ll also need to track what you spend on fuel, insurance, lease payments or interest on a loan, maintenance costs, registration, repair costs, tolls, and parking fees.
You can also deduct motorcycle-specific items such as helmets or leather gear.You’ll also be able to take a deduction for depreciation. Unlike vehicles, there is no strict annual dollar limit on what can be deducted for motorcycles, which is potentially very good news to motorcycle owners. For a car or van that you use 51% of the time for work, your maximum deduction would be $11,160, no matter what the car cost. That deduction caps out at $3,160 if you use the vehicle for work less than 51% of the time. These limits do not apply to motorcycles, giving you much more freedom to deduct your entire depreciable basis in a single year if you so choose under a provision of the tax code titled Section 179. Under this provision, if you paid $15,000 for a motorcycle that you then used for work 75% of the time in 2019, you could then deduct $11,250 from your 2019 taxes.Since you need to track so many different expenses in order to accurately and effectively calculate your motorcycle mileage deduction, you can see why automating your mileage tracking can simplify matters by centralizing all your data. Additionally, keeping IRS-compliant records in a single location makes pulling up monthly, quarterly, and annual expenses simple and makes your data easier to interpret.
Calculating Your Motorcycle Mileage Deduction
Because the motorcycle mileage deduction is different from the standard mileage deduction, there are some subtle differences in how the two are to be calculated. This is where those meticulous records you’ve been keeping come into play, allowing you to maximize your deduction and prove the validity of your deductions. First, you’ll need to calculate what percentage of the time you use your motorcycle for business purposes. You will then calculate the percentage of your total motorcycle-related expenses that can be deducted for business purposes. Let’s say that you drove your motorcycle 75% of the time for business purposes. You can then deduct 75% of your total expenses. You’ll also deduct any depreciation costs at this time.
Using the actual mileage deduction is more complex than the standard mileage deduction, but keeping detailed records doesn’t have to be confusing. Using a mileage tracking app can simplify and centralize your record-keeping, making maintaining and accessing detailed, IRS-compliant records and calculating your mileage simple and straightforward.