Standard mileage vs actual expenses which is better for tax deductions?

I've been filing Schedule C for my business for over 10 years, and I've tried both methods. Here's what you need to know: The standard mileage rate for 2024 (for 2025 filing) is 67 cents per mile for business miles. So for 15,000 business miles, that's $10,050 in deductions right there. Pretty straightforward. For actual expenses, you'd add up ALL your car costs (gas, oil, repairs, tires, insurance, registration, depreciation, loan interest, etc.) and then multiply by your business use percentage (70%). This method requires more documentation but can be better if you have a newer, more expensive vehicle with high costs. I recommend creating a simple spreadsheet with your actual expenses to compare. Don't forget to include depreciation if you go the actual expense route - that's often the biggest item people miss. Also, keep in mind that if you use actual expenses the first year, you can switch to standard mileage later, but if you use standard mileage first, you can't switch to actual expenses for that vehicle.

Hey there! I was exactly in your shoes last year with my consulting business. I was driving all over the place and couldn't figure out which method would save me more. I tried using spreadsheets but got super confused with depreciation calculations and trying to figure out what percentage of each expense was business-related. I ended up using this tool called taxr.ai (https://taxr.ai) that someone recommended on this forum. It actually analyzes your specific situation and compares both methods side by side. You just upload your receipts and mileage log, and it shows you which method gives you the bigger deduction. For me, with my 2018 Nissan Altima driving about 12,000 business miles, the standard mileage rate was actually better by about $1,200. The tool also keeps track of everything for you so if you get audited, you have all your documentation organized. Been using it for the past year and it's made tax time way less stressful.

I need to follow up about my experience with taxr.ai since I posted that skeptical comment above. After looking at the mess of receipts I had for my 2022 Toyota RAV4, I decided to give it a try. The tool ended up saving me almost $2,300 by showing me that actual expenses were better in my case (I was going to use standard mileage). What surprised me was how it caught things I wouldn't have considered - like including a portion of my garage rental as a car expense and the depreciation calculations were WAY more detailed than what I was doing. It also helped me properly document business vs personal use by integrating with my calendar. For anyone on the fence between standard mileage vs actual expenses, having something automatically calculate both side by side was super helpful. Plus now I have proper documentation if I ever get audited.

If you're spending hours trying to reach the IRS to ask about mileage deductions or expenses, I feel your pain. I was trying to get clarification about some home office and vehicle deduction questions for weeks with no luck. Endless busy signals and disconnects. I finally used this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 20 minutes. You can see how it works in this quick video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was super helpful and walked me through how to properly document my mileage vs actual expenses question. She confirmed that in my situation (contractor with a newer vehicle) the actual expense method would likely be better, but said I needed specific documentation to make it work. Got more useful info in that one call than weeks of Googling.

I have to eat my words about Claimyr. After posting that skeptical comment, I decided to try it as a last resort since I still couldn't get through to the IRS about my amended return (which also affected how I needed to handle my business vehicle expenses this year). It actually worked. Got a call back in about 45 minutes saying they had an IRS agent on the line. The agent walked me through both my amended return issue AND helped me understand the actual expenses vs standard mileage question. What I learned that might help others: if you have a newer vehicle with higher payments/costs but fewer miles, actual expenses often wins. If you drive tons of miles in an older, paid-off, fuel-efficient car, standard mileage is usually better. In my case, with my 2023 F-150 that I use for my construction business, actual expenses saved me about $3,400 versus standard mileage.

Something nobody's mentioned yet - if you're leasing the vehicle, the math can be totally different. I lease my business car and found that actual expenses worked out much better because I could deduct the entire lease payment (based on business %) rather than relying on the standard mileage. Also, if you go the actual expense route, don't forget to include: - Car washes (if your business requires a clean vehicle) - Tolls and parking (these are separate deductions either way) - Interest on your car loan (based on business %) - Depreciation (which changes based on your vehicle's cost) I use a dedicated credit card for all car expenses to make tracking easier. At tax time I just download the yearly statement and categorize everything.

Has anyone used TurboTax to compare these methods? Is there a way to see side-by-side which one gives better deductions without manually calculating everything twice?

Great question! I faced this exact dilemma last year with my marketing consulting business. Here's what I learned from running both calculations: For your 2019 CR-V with 15,000 business miles at 70% business use, the standard mileage would give you $10,050 (15,000 × $0.67). But with a newer vehicle like yours, actual expenses might be better. Here's a quick way to estimate: Add up your annual car costs (loan payments, insurance, gas, maintenance, registration, etc.) and multiply by 70%. Don't forget depreciation - that's usually the biggest factor with newer cars. For a 2019 CR-V, you might be looking at $4,000-6,000 in annual depreciation alone. One thing that helped me decide was tracking everything for just one month to get a sense of my actual costs, then extrapolating. If your monthly car expenses × 12 × 70% comes out higher than $10,050, actual expenses is probably better. Also consider your future plans - if you're planning to keep this car for many years and expect high maintenance costs as it ages, starting with actual expenses now might be smart since you can't switch later. But if you typically trade cars every few years, standard mileage gives you more flexibility. The key is being meticulous with record-keeping whichever method you choose!