What is a Deduction for Mileage?

Christine Hudson

A deduction for mileage is a tax option given to small and large business owners and employees which lets them write off certain gas charges. To take part in this deduction, the owner filing needs to calculate the miles or kilometers driven during the year for business purposes and then multiply by the standard deduction rate per mile or kilometer. For example, if the total miles driven for business purposes were 1,000 (1,610 kilometers) and the per-mile or per-kilometer rate for that year was $0.51 US Dollars (USD), then the deduction amount would be $510 USD.

An employee may have to submit fuel receipts to verify that the company's money was indeed spent on gasoline.
An employee may have to submit fuel receipts to verify that the company's money was indeed spent on gasoline.

Applying the deduction to a company’s yearly or even quarterly tax reports is generally simple, but accurate records are very important. Many tax and accountant experts suggest keeping a record of miles or kilometers before and after travel for business purposes as well as receipts of gas purchases. It is also important to know that not all miles or kilometers used on a business vehicle are eligible for a deduction for mileage.

Employees who pick up the post for their work may be able to deduct their mileage for tax purposes.
Employees who pick up the post for their work may be able to deduct their mileage for tax purposes.

Common instances when a deduction for mileage can be claimed are trips to seminars, client meetings and other business-related outings. Business owners can also claim deductions for trips to the bank, post office and supply store which are business-related. While most businesspeople recognize that purchases at these places can be deducted, many fail to understand the gas used to get there can also be claimed.

Those who work from home may also take advantage of a deduction for mileage on their taxes. A vehicle designated for business purposes is not necessary. What is necessary is that the mileage used be for work purposes. A trip to the store for extra printer paper or ink or a weekly visit to the head office are common instances in which a deduction can be claimed and often is not. Those who work as a remote employee may be eligible for the deduction claims and should speak with a tax professional about the possibilities.

Tracking mileage use for business purposes may become difficult over the course of a full year. To help business owners and employees keep accurate records, there are software programs available. Depending on the program, a businessperson may be able to input vehicle mileage at the beginning of the year and then simply add to it each time a business trip is made. At the end of the year, the miles or kilometers are already totaled and the deduction amount is quickly figured. Whichever method is used, it is up to the businessperson to keep updated records for accurate filing.

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