How to Calculate Mileage for Taxes

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How to Calculate Mileage for Taxes

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Are you an employee or self-employed worker who uses a vehicle for business purposes? Did you know that unreimbursed mileage expenses are a possible itemized tax deduction? Although taxes are only filed once a year, keeping records to accurately calculate mileage for taxes can be a yearlong commitment.

The federal government allows a certain amount of money per mile to be deducted for the designated areas of business, medical, moving and charitable travel. It is the responsibility of the employee or self-employed worker to keep track of that mileage and correctly calculate mileage for taxes. Here are the steps to accurately calculate mileage for your next income tax return.

Steps

1. Buy a small notebook to record mileage. Keep it in your car at all times so that mileage can be recorded as it is incurred.

2. Visit the Internal Revenue Service (IRS) website at www.irs.gov to learn about the types of mileage deductions and the rate per mile. Effective Jan. 1, 2009, the standard mileage rates are as follows:

55 cents per mile traveled for business
24 cents per mile traveled during a move
24 cents per mile traveled for medical reasons
14 cents per mile traveled when donating to or working for charitable organizations

3. Learn more about the deduction qualifications for each of those categories.

Mileage deducted for business purposes includes travel to clients or customers, going to a business meeting away from a regular workplace, going to a temporary workplace or traveling among several offices within a region.
Mileage deducted for moving purposes must meet a distance or time qualification. The first stipulates that a new home must be at least 50 miles from your place of business. The second stipulates that a person must work at least 39 weeks per year in the new location to deduct overall moving expenses inclusive of mileage.
Mileage deducted for medical purposes can be taken for traveling to and from a place of medical care. Tolls and other associated travel fees should be listed separately.
Mileage deducted for charitable purposes includes travel to and from donation locations as well as during volunteer work for an organization.

4. Notate qualifying mileage throughout the year. Write down the starting mileage, ending mileage and address of the location you were traveling to and from.

5. Multiply the total number of miles traveled throughout the year by the mileage rate for each category. For instance, you may deduct 14 cents per mile when working for charitable organizations and 55 cents per mile traveled for business. If you drove 1,000 miles for charity and 1,000 miles for business, then you would multiply 1,000 miles by 14 cents and 1,000 miles by 55 cents.

6. Add up all the deductions from the different categories to determine your total deduction. This yields a result of $140 for charitable travel and $550 for business travel, which equals a total deduction of $690.

7. Keep your records for a period of three to seven years. Depending on other deductions you might have claimed on your tax return, the IRS suggests that you keep your records for this period of time.

Tips

Download a mileage worksheet from the Internet to help you with your calculations. These worksheets usually encompass the four categories of business, medical, moving and charitable travel as well as keep tabs on repairs. Repairs may be deductible depending on the nature of your business.