Which method is used for calculating business automobile expenses by multiplying business miles by a set rate?

The method used for calculating business automobile expenses by multiplying business miles driven by a predetermined rate is known as the standard mileage method. This approach simplifies the calculation of deducting automobile expenses for business purposes. Instead of tracking all actual expenses related to the operation of a vehicle (like fuel, maintenance, insurance, and depreciation), you simply need to keep a record of the total business miles driven during the year.

At the end of the year, this total is then multiplied by the standard mileage rate set by the IRS. This rate is adjusted annually and reflects the average costs associated with operating a motor vehicle. Using this method can be advantageous as it alleviates the need for detailed record-keeping of all vehicle-related expenses, making it a practical option for many taxpayers.

The other methods mentioned, such as the actual expense method, involve more complex computations and record-keeping, which are not necessary when using the standard mileage method. Therefore, opting for the standard mileage method is both convenient and efficient for calculating business automobile expenses.