a young man with a purple shirt smiling

Self-Employed Mileage Guide

Self-employed people should be tracking mileage for taxes because work miles are tax deductible. These deductions add up—Everlance users deduct $6,500 on average each year.This guide addresses how to track your mileage and turn it into tax deductions.

Mileage write-off methods

According to the IRS, if you only use your car for business purposes, you can deduct 100% of ownership and operation costs. Most self-employed people, however, use their vehicles for business and personal uses. In that case, you can only deduct the cost of business use.

The two primary methods for calculating your deductible car expense are:

  • The standard mileage rate method
  • Actual expense method

The Standard Mileage Rate Method

This is the easiest method to use.

The standard mileage rate method applies to self-employed people who own or lease their car. However, it’s important to note that you must use this method in the first year you use your vehicle for business to use the standard mileage rate method. After that, you can switch between the methods without penalty.

How to use the Standard Mileage Rate method:
  • Track mileage for the tax year with a tracking app (like Everlance). For every work trip, make sure you log your mileage, the date, the places you drove, and the business purpose for your trips. 
  • At tax time, multiply your year’s work mileage X the current standard mileage rate for business to calculate your deduction. It’s important to always use the mileage rate for the given tax year. (1,000 business miles x $.56 standard rate = $560 deduction)

The absolute best way to track your mileage is to keep contemporaneous mileage logs—meaning you create your mileage log as you drive each day. That’s why a tracking app is so crucial—it takes care of this work for you!

If you use the Standard Mileage Rate method, you can’t also deduct individual car expenses. Head to the current mileage rate guide to use this method.

What counts as a work trip?

It’s best practice to track all of your mileage (both business and personal). You can usually classify a trip as work if it fits one of the following:

  • Traveling between two distinct places of work
  • Meeting clients/customers
  • Meeting with your accountant/lawyer for business purposes
  • Running errands for business

To stay organized, be sure to talk with your tax advisor about the details of which trips you can and cannot deduct. If you track all your mileage with detailed notes, you can rest easy because you’ll have all your data on hand at tax time. 

Gig tip

If you work for rideshare or food delivery:

  • Be sure to include the miles you drove to pick up passengers/food or to a central location after dropping them off—you don’t have to have passengers/food in the car to count these miles as work. 

Actual Expense Method

Didn't choose the standard mileage rate method? You might be able to deduct your actual vehicle expenses. 

According to the IRS, these expenses include:

  • Lease payments
  • Depreciation
  • Registration fee
  • Licenses
  • Gas & oil
  • Tolls
  • Garage rent
  • Parking fees
  • Repairs
  • Tires

This method is more complicated. If you decide to use this method, be sure to consult with your tax advisor ahead of filing time. Also, be sure you’re using your mileage tracking app (like Everlance) to track how much you’re driving for personal vs. business, so you know what percentage of these expenses can be deducted.

So which method should you use?

Whichever method gets you the biggest tax deduction! Unfortunately, this is usually only obvious at the end of the tax year. It’s best practice to track your miles all year round. At tax time, calculate your deduction using both ends and pick whichever method will lower your tax bill the most.

Are you self-employed and an employee?

Then you must keep separate records for each business activity. Go to this article for the employee mileage guide.

Want to track and report your work mileage easily?

Like your personal assistant, a mileage tracker like Everlance creates detailed mileage logs of your work trips and lists of expenses for you. Try it today.