How Notaries Can Deduct Mileage and Car Expenses on Their Tax Return
How Notaries Can Deduct Mileage and Car Expenses on Their Tax Return
As a notary public, your work often requires traveling to various locations to meet clients, notarize documents, and perform other essential duties. The good news is that the IRS allows notaries to deduct certain car-related expenses on their tax return, helping to reduce taxable income. Here’s a guide to understanding and maximizing these deductions.
1. Standard Mileage Rate vs. Actual Expenses
Notaries can choose between two methods for deducting car expenses:
Standard Mileage Rate: The IRS sets a standard mileage rate each year. For 2024, this rate is 65.5 cents per mile (check for updates annually). To use this method, simply multiply your business miles by the standard rate.
Actual Expenses: This method allows you to deduct the actual costs of operating your vehicle for business purposes. These expenses include gas, oil changes, repairs, insurance, registration, and depreciation. To use this method, you must calculate the percentage of your vehicle’s use that is for business purposes.
2. Eligibility Requirements
To qualify for car-related deductions, you must meet the following criteria:
The travel must be directly related to your notary business.
Commuting between your home and your primary workplace is not deductible. However, traveling to meet clients or between job sites is deductible.
You must maintain proper records (see below).
3. Record-Keeping Essentials
The IRS requires accurate and detailed records to support your mileage and car expense deductions. Keep track of the following:
Mileage Log: Record the date, destination, purpose of the trip, and the number of miles driven. Apps like MileIQ or QuickBooks Self-Employed can automate this process.
Receipts: If you’re using the actual expenses method, save receipts for gas, repairs, insurance, and other vehicle-related expenses.
Odometer Readings: Record your vehicle’s odometer reading at the beginning and end of the year to calculate total miles driven.
4. How to Claim the Deduction
When filing your taxes, use Schedule C (Profit or Loss from Business) to report your income and expenses as a self-employed individual. Here’s how to include your car-related deductions:
If using the standard mileage rate, report the total business miles driven and the corresponding deduction.
If using the actual expenses method, report the total costs and the percentage attributable to business use.
5. Additional Tips for Notaries
Include Parking and Tolls: These costs are deductible in addition to mileage or actual expenses.
Home Office Deduction: If you qualify for a home office deduction, the distance between your home and your first client may be deductible, as your home is considered your primary place of business.
Leased Vehicles: If you lease your car, you can deduct the business-use portion of your lease payments.
6. Common Mistakes to Avoid
Mixing Personal and Business Use: Ensure you separate personal and business mileage. The IRS scrutinizes car-related deductions, so precise records are essential.
Forgetting to Log Miles: A forgotten log can result in disallowed deductions. Establish a routine for tracking mileage.
Not Choosing the Optimal Method: Evaluate both deduction methods annually to determine which provides the greater tax benefit.
Conclusion
As a notary public, tracking and deducting your mileage and car expenses can significantly lower your tax bill. Whether you opt for the standard mileage rate or the actual expenses method, meticulous record-keeping is key. By understanding these rules and staying organized, you can ensure you’re taking full advantage of the deductions available to you. If you’re unsure about how to apply these deductions, consult a tax professional to help maximize your savings.
