You can count the miles of a trip as business as long as the “primary purpose” of the trip is for your business.
A trip is primarily for business purposes if more than half of the reason for the trip is business.
Taking daycare children on field trips or transporting them to or from your home can clearly be counted as a business trip.
Trips to the bank to deposit parent fees, to the library to get children’s books, or to training workshops also count as business trips.
What about these trips?
1) You drive to the gas station to get gas.
You could only count this trip if more than half the miles your drove your car was for business purposes. This would be highly unlikely unless you had a second car that you used primarily for your business.
2) You drive to the grocery store to buy business and personal food.
If you spent more money on business food than personal food, you can count this trip. Many providers almost always buy more business food than personal food. If so, don’t try to claim every trip to the grocery store as a business trip. The IRS will never allow this. Instead, if you normally spend 75% of food for your business, count 75% of your trips.
3) You drive to school to drop off two daycare children and two of your own.
This example is tricky. If the primary reason to go to school is to drop off the daycare children, then count the trip. If the primary reason is to drop off your own children, don’t count the trip. If you weren’t in business and would drop off your own children, don’t count these trips.
Claiming Business Trips
Once you have determined whether or not your trip is a business trip, add up all the miles for your business trips.
If you choose the standard mileage method multiply your business miles by $.575 (2015 standard mileage rate). In addition, you can claim parking expenses, tolls and the business portion of your car loan interest and any personal property tax on your car.
If you use the actual expenses method you can claim the business portion of all expenses associated with your car: gas, oil, repairs, insurance, parking, tolls, membership in AAA, car wash, depreciation, etc.
The business portion of your car expenses is determined by dividing the number of business miles by the total number of miles your drove your car. For example, if you drove 3,000 business miles and 10,000 total miles, you business use is 30%. You could then deduct 30% of your car loan interest and personal property tax if you use the standard mileage rate, or 30% of all your vehicle expenses if you use the actual expenses method.
If you have more than one vehicle you can choose either method for each vehicle.
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.flickr.com/photos/philiphubs/
For more information, see my Family Child Care Record Keeping Guide.