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Calculating Your Mileage for Tax Purposes
If you use your car for business-related activities, you may be able to deduct your mileage for taxes. Claiming mileage deductions on your taxes can help you save money and can be relatively easy to do. Here's how to get started:
Step One: Calculate Your Base Mileage
Before you start calculating your mileage to deduct, you'll need to determine what you'll be counting as business miles. This includes any miles associated with activities related to your business, such as driving to meetings or transporting goods. To calculate your base mileage, simply add up every mile driven with a business-related purpose. Keep careful track of all business-related mileage over the course of your fiscal year.
Step Two: Determine Your Deductible Mileage
Once you have your total business mileage, you can figure out how much of it is eligible for a tax deduction. Generally, the IRS allowing claiming of of 55 cents per business mile. To determine your deductible mileage, then, simply multiply your total business mileage by 0.55.
Step Three: Record Your Deduction
Once you've determined your mileage deduction, you'll need to keep track of it in your taxes. Most tax forms require that you have supporting documentation, such as a mileage log. This should include all relevant information, such as the starting and ending odometer reading for each business trip, as well as the dates and the purpose of the trip. This information will be used to help determine the eligibility of your deductions in the event of an audit.
Final Step: Claim Your Tax Deduction
When it comes time to do your taxes, you can simply enter the total amount of mileage deductions you've calculated in the relevant field on your tax return. Make sure that you double-check all of your information and supporting documents, and you'll be good to go!
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