If you use your car while doing business, it is imperative that you keep accurate records of your mileage. Whether you're being reimbursed by your company or taking a business deduction for mileage, there's more to tracking mileage than just re-setting the trip meter on your odometer. Keeping good records can save you money in the long run and protect you in the event your expenses are questioned.
Zero the odometer trip meter in your car before you begin each trip. If your car does not have one, write down the odometer reading in your log book. Write down the starting point of your trip and the time of day. At the beginning of each year, also note the odometer reading on your car.
Log the amount of miles driven when your trip is complete along with the reason for the trip and details relevant to the trip. For example, your notation might read, "New York to Philadelphia, round trip, 188 miles. Met with John Smith to discuss contract with XYZ Corporation." This documentation will come in handy should your expenses ever be challenged.
Get the mileage reimbursement rate from the company for whom you are working and multiply the number of miles traveled by the rate. For example, if the mileage reimbursement rate is 50 cents per mile and you've driven 1,000 miles, you should receive $500 as a mileage expense.
Consult the IRS rules regarding mileage deductions if you are going to deduct your mileage on your income tax return. It is also a good idea to determine the percentage your vehicle was used for business. To do this, divide the number of business-related miles by the total number of miles driven in a given year.
While not a business expense, mileage incurred for medical or charitable reasons is also deductible at a reduced rate.
- While not a business expense, mileage incurred for medical or charitable reasons is also deductible at a reduced rate.
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