Question:
I put a lot of miles on my personal car for business purposes. Are they considered business miles? Can I deduct the gas or a set rate per business mile from my income tax? How do I know the rate?

Answer:
Business miles are miles put on a personal car for business purposes. They are a business expense.

You cannot deduct the gas. That is a personal expense. You can deduct a dollar amount for each business mile driven.

For a business expense to be deductible, it must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your type of business. A necessary expense is one that is helpful and appropriate for your business. For the most part, you determine what miles are appropriate for your business.

The IRS sets the rates each year and they can be found on their website at www.irs.gov. For 2007, the rates were 48.5 cents per mile for business miles, 20 cents for medical miles or moving expenses and 14 cents per mile for miles driven to a charitable organization.

The IRS just announced the 2008 standard mileage rate. The rates for 2008 are 50.5 cents per mile for business miles driven, 19 cents per mile driven for medical or moving purposes and 14 cents per mile driving to a charitable organization.

Keep track of the business miles you put on your personal car and deduct them from your revenue on your tax return. If you are a general corporation, you can pay yourself for the business miles at the government rate. It makes a nice addition to your personal income.

Remember, the IRS needs everything documented. Keep track of the odometer, the miles and where you went. I have a nice and easy spreadsheet I designed to keep track of my business miles. If you want a copy, e-mail me at bemis@nnba.net. I am always happy to share. 

Good luck, Pat

Editor’s note: Congratulations to Pat Bemis on her first column — called Nurse Biz — in RN magazine’s December issue. Her column appears on Page 22.