Federal Laws on Mileage Reimbursement

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The Internal Revenue Service allows businesses to deduct some of their expenses, including the expense of operating a vehicle. Of course, a car or truck brings with it many separate expenses. To avoid the hassle of documenting and claiming the dollars you're spending to keep your car on the road, the tax people allow you to just count up the mileage and deduct a standard rate. Know the rules and guidelines before attempting this useful deduction.

Business and Personal Miles

The No. 1 IRS rule on business mileage concerns how you use the vehicle. Only business-related driving can go into your business mileage deduction. If you use a vehicle for personal errands and trips, you may not count those miles. It's essential to keep a log for your vehicle if it's dual purpose and to note only the business miles you drive; these miles should not include nondeductible daily commuting.

Mileage and Other Expenses

If you take the mileage deduction, you simply multiply the number of miles you drive by the standard mileage rate, whatever it is this year. For the 2014 tax year, the IRS standard rate reached 56 cents per mile. Thus, if you drove 10,000 business-related miles, you can deduct $5,600 for mileage driven. Taking the mileage deduction means no other costs are deductible -- not repairs, gas, insurance, maintenance or leasing costs. However, the IRS makes an exception for parking fees and tolls; these expenses can be added to the mileage deduction.

Other Rules and Reimbursement

The IRS has other rules for claiming the standard mileage deduction. If you use a car that you own for business, you must claim the standard rate in the first year you put the car to work to claim the standard rate in subsequent years. Otherwise you must use the "actual expense" method. If you are reimbursed by your employer for your mileage, you may still be able to claim the IRS rate, depending on how the boss reimbursed you for transportation, meals, lodging, entertainment and related expenses. It's complicated, so you might want to consult a tax professional if you are getting employer reimbursement for some of these costs.

Taking the Deduction

If you want to claim mileage as an employee, your deduction appears on Schedule A, the IRS form used to itemize this and other personal deductions. The IRS allows you to write off unreimbursed employee expenses only to the extent they exceed 2 percent of your adjusted gross income. If you're running a business or are self-employed, your mileage appears on Part II, Line 9, of Schedule C, which details business income and expenses.

References

About the Author

Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.

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