Question

Which of the following statements regarding deductible auto expenses using the standard mileage rate method is true?

1) The standard mileage rate method allows for the deduction of actual expenses incurred for operating a vehicle for business purposes.
2) The standard mileage rate method cannot be used for deducting auto expenses for medical or moving purposes.
3) The standard mileage rate method is only applicable for vehicles used for business purposes.
4) The standard mileage rate method is calculated based on the number of miles driven for business purposes.

Answer 1

The correct statement is option 4. The standard mileage rate method is calculated based on the number of miles driven for business purposes.

Step-by-step explanation:

The correct statement regarding deductible auto expenses using the standard mileage rate method is option 4) The standard mileage rate method is calculated based on the number of miles driven for business purposes.

When using the standard mileage rate method, a taxpayer can deduct auto expenses based on the number of miles driven for business purposes. The IRS sets a standard mileage rate each year, and the taxpayer multiplies their business mileage by this rate to calculate the deduction.

For example, if the standard mileage rate is $0.58 per mile and a taxpayer drove 1,000 miles for business purposes, their auto expense deduction would be $580 (1,000 miles x $0.58).