Tax deductions for driving your car? You bet

America is a nation of drivers. The U.S. has about 214 million licensed drivers, which is about seven of every 10 of us.

But did you know that if you drive your car during specific activities, you may be eligible to claim a tax deduction for the miles you drive? I’m guessing a lot more people could claim this deduction than do so. Only about 30 percent of all households itemize deductions, and only a subset of these claim the mileage deduction.

If you drove your automobile for business, medical reasons, moving for work or in support of a charitable organization, here are the mileage rates you can claim on your 2016 tax return:

  • Business: 54 cents per mile (decreasing to 53.5 cents in 2017)
  • Medical or moving: 19 cents per mile (decreasing to 17 cents in 2017)
  • Charitable purposes: 14 cents per mile (unchanged in 2017)

Business mileage deduction

If you want to claim this deduction, you need to first know that the miles you drive to commute to work aren’t included. But any mileage you drive from your home or workplace to another work-related location and back are fair game. If your employer doesn’t reimburse you for the business miles you drive, keep a record of the mileage and purpose of each trip, so you can claim those miles.

For your 2016 tax return, you can claim the deduction on Schedule A Itemized Deductions, under the section for Job Expenses and Miscellaneous Deductions. If you’ve used your own vehicle and are using the standard mileage rate of 54 cents per mile and your employer didn’t reimburse you, report this deduction on Form 2106 EZ instead.

Either way, you can deduct only the amount of all miscellaneous expenses that exceeds 2 percent of your adjusted gross income.

Medical mileage deduction

When you drive to receive medical care, the miles driven can be added to the other out-of-pocket costs you pay for care. If you’re age 65 or older in 2016, these costs (including the mileage) must exceed 7.5 percent of your adjusted gross income before any can be deducted. For everyone else (and for everyone in 2017, regardless of age), only medical costs exceeding 10 percent of AGI can be claimed.

Moving mileage deduction

To be eligible for this deduction, you must meet the “time and distance criteria”: The miles driven are because you take a new job, your new job is at least 50 miles away from your former home and you start working in the new job the first year you live in your new residence and work for at least 39 weeks.

Again, this mileage deduction is a part of your overall miscellaneous expenses, and you can deduct only the amount that exceeds 2 percent of your adjusted gross income.

Charitable mileage deduction

If you drove to and from a charity to perform volunteer work or to donate your services, you can claim this deduction, at 14 cents per mile. Or you can deduct the actual cost of gas and oil used. Either way, you can also add parking and tolls, if the charity didn’t repay any of these costs. 

This deduction is also claimed on Schedule A but isn’t subject to any AGI limits like the others.

  • Ray Martin

    View all articles by Ray Martin on CBS MoneyWatch»
    Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.