Are you taking full advantage of the valuable tax deduction for mileage expenses? Each year, the IRS sets standard mileage rates for business travel, medical driving, moving mileage, and charitable driving. However, many taxpayers miss out on this deduction due to improper documentation. To ensure that you receive the full benefit of this deduction, it’s important to keep accurate records of your mileage and expenses. In this blog post, we’ll provide you with some helpful tips for tracking your mileage and maximizing your deductions.
- Track your applicable mileage in a designated auto log. This log is required to ensure your deduction is not disallowed during the course of an audit. Always make sure the business/charitable/medical purpose, date and distance is clearly noted.
- Keep track of parking, tolls and other miscellaneous travel expenses. These can often be deducted in addition to the standard mileage rate.
- Submit expense reports if your mileage can be reimbursed. Most employers will reimburse you for business mileage at the approved rate, but many employees fail to ask for reimbursement. Remember, your employer can deduct this reimbursed expense on their tax return as well.
- Keep track of medical miles. Even though you need to surpass a percent of your income prior to taking medical expenses as an itemized deduction, you should still keep track of qualified medical miles. It often only takes one major medical bill to make all your other excess medical expenses deductible.
- Plan your business trips to ensure your miles are deductible. Commuting miles to and from work are not deductible. However, if you stop off at a supplier first, then the mileage from the supplier to your workplace is a deductible expense.
- Do not forget charitable miles. This deduction is one of the most often overlooked deductions. Do you drive for Meals on Wheels or for a school function? Do you volunteer as a coach for a non-profit sporting group? These miles add up over time and are often not properly documented.