Employees with unreimbursed mileage expenses were able to claim them as part of their itemized deductions prior to the Tax Cuts and Jobs Act.The federal government allows a certain amount of money per mile to be deducted for certain areas.
Step 1: You can learn the different rate for each type of mileage.
The IRS website has information on the types of mileage deductions and the rate per mile.If you're calculating for last year, it's important to double-check with the official IRS website against the figures described here.When donating to or working for charitable organizations, the standard mileage rate is 14 cents per mile.
Step 2: Take your business mileage and divide it by the number of employees.
Business mileage includes travel to clients or customers, going to a business meeting away from a regular workplace, or traveling among several offices within a region.
Step 3: Medical deductions are calculated.
For traveling to and from a place of medical care, mileage can be deducted.The travel fees should be listed separately.If your total medical expenses, including medical mileage, are greater than the medical deduction threshold for that year, you will not receive a federal tax benefit for medical deductions.
Step 4: You should calculate your mileage related to donations.
Travel to and from donation locations as well as volunteer work for an organization are deductible for charitable purposes.If you take your deductions, you will get a federal tax benefit for charitable mileage.
Step 5: To record mileage, keep a small notebook in your car.
It's a good idea to keep it in your car at all times.It's important to distinguish the different types of mileage that you're recording.You can use a mileage app to track your mileage.The easiest way to remember is to write down the starting and ending mileage at the original destination, as well as the addresses of the locations you were traveling to and from.You should clearly date each entry in your log book.
Step 6: Only applicable mileage will be recorded.
The categories described in the previous section are the only types of mileage that are deductible.Unless you did it for business, your trips from home to the store can't be deducted.If you're given a company car, some businesses will offer mileage allowances and other types of agreements.The financial advisor at your office can give you more specific information.
Step 7: You have to calculate your total at the end of the year.
Divide the total number of miles traveled by the mileage rate for each category.If you work for a charity and travel for business, you can deduct 14 cents per mile.If you drove 1,000 miles for charity and 1,000 for business, you would have to add up the miles.
Step 8: Take care of your records.
You should keep your records for 3 to 7 years according to the IRS.To be on the safe side, you want to keep your records for at least that long.Refer to the state's statute of limitations to find out how long you need to keep your records.