How to Calculate Mileage for Taxes
Those of us who fall in the tax bracket pay taxes each year. This is once in a year but one for which we must prepare as they can take a toll on our pockets. We must also be aware of the possible deductions that are on offer.
One such deduction is the usage of your car for employment or business purposes. You can deduct the amount you spend in this regard for fuel during the year from your taxable income. This can be a boost in most cases and a good way to reduce the amount of taxes to be paid.
Instructions
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1
Make a Note
This is a process that you must continue throughout the year. Have a notebook in the car and whenever you travel in official capacity, note down the mileage. It is best that you note down the starting mileage and the mileage at the end point as well. This will give you the exact number of miles that you have travelled. -
2
Learn the Deductions
Understand which travel will come under a deductible head and which will not. Also visit the website of the IRS or your country’s tax department and know the standard rates that are being offered per mile. This will let you know exactly how much deductions you will be eligible for at the end of the fiscal year. -
3
Note Down Your Destinations
It is very important as the rate for each trip that qualifies is different. A business trip may allow you 55 cents per mile deduction whereas a trip for charitable purpose may only allow 14 cents. So while you note down the miles, also note down the destinations and the purposes of travel. -
4
Calculate Totals
Make sure that you assemble a final figure at the end of the day. Have all the mileages and the rates calculated and get it put on your tax return. You will probably have several hundred dollars in income that will become tax deductible. -
5
Keep the Record
Keep the record for at least five years as it is recommended by the IRS. It may be required at a later stage if a tax audit takes place so you can have the information available. It will be a big help in avoiding a major headache.
