This is one of the largest tax deductions for small businesses and self employed people. It is important to protect this deduction by keeping adequate records.

ALWAYS KEEP A MILEAGE LOG!

Here are the basics

Commuting mileage is not deductible unless you have a qualified office in your home. Otherwise, from your home to your first business stop is commuting, so is the mileage between your last stop and home.

There are two ways to deduct mileage:

1. ACTUAL - Deduct the actual costs of operating the vehicle plus depreciation or Section 179 expensing. This is prorated by miles used for business-vs-total mileage.
   
2. MILEAGE RATE - Whether you lease or own, you can deduct a flat amount per business mile only. See the rates listed in the table above. Actual costs of operating the vehicle are not required to be kept or proven.

NOTE: Whether using the actual method or the mileage rate, the business portion of car interest is always deductible for the self-employed who file their business on a Schedule C in their personal return and for corporations who own the vehicle in the corporate name. In addition, parking fees and tolls are also deductible for all entities.