Calculate Mileage for Taxes

If you are an employee or self-employed worker who uses a vehicle for business purposes, unreimbursed mileage expenses are a possible itemized deduction. 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 over the year and correctly calculate mileage for taxes. You can learn what mileage is deductible and how to record it.

Steps

What Mileage Counts?

  1. Learn the different rate for each type of mileage. Visit the Internal Revenue Service (IRS) website at www.irs.gov to learn about the types of mileage deductions and the rate per mile. The rate typically changes yearly, and if you're calculating for last year, it's important to double-check with the official IRS website against the figures described here below.[1] Effective Jan. 1 2015, the standard mileage rates are as follows:
    • 57.5 cents per mile for business-related mileage
    • 23 cents per mile traveled during a move
    • 23 cents per mile traveled for medical reasons
    • 14 cents per mile traveled when donating to or working for charitable organizations
  2. Calculate your business mileage. 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 if you have a regular place of work or traveling among several offices within a region.
    • Business mileage is deductible in 2015 at a rate of 57.5 cents per mile.
  3. Calculate your moving mileage. Mileage deducted for moving purposes typically must meet a distance or time qualification. The distance between your new job and your former home must be at least {{safesubst:#invoke:convert|convert}} farther than your previous employer is from that home. For example, if your previous commute to work was five miles each way, then the distance from your new job location to your old home must be at least {{safesubst:#invoke:convert|convert}}.
    • When evaluating whether you satisfy the distance test, the IRS requires you to use the shortest commutable routes between two locations.[2]
    • 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.
    • Moving mileage is deductible in 2015 at the rate of 23 cents per mile.
  4. Calculate your medical deductions. 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.
    • Medical mileage is deductible in 2015 at the rate of 23 cents per mile.
  5. Calculate your donation-related mileage. Mileage deducted for charitable purposes includes travel to and from donation locations as well as during volunteer work for an organization.
    • Donation-related mileage is deductible in 2015 at the rate of 14 cents per mile.

Keeping Track of Mileage

  1. Keep a small notebook in your car to record mileage. Keep it in your car at all times so that mileage can be recorded as it is incurred. It's important to differentiate the different types of mileage that you're recording, as well as the miles traveled.[3]
    • The easiest way to do this is to write down the starting mileage at the original destination, the ending mileage at the travel destination, and the addresses of the locations you were traveling to and from, as well as the purpose of the trip business, charity, medical, or move.
    • Clearly date each entry in your log book for quick access.
  2. Only record applicable mileage. In general, no other type of mileage is deductible, than the categories described in the previous section. Your trips from home to the store cannot be deducted, even if you did it during the work day, unless it was done for business purposes.
    • Some businesses will offer mileage allowances, and other types of agreements if you're given a company car. Talk to your HR representative or the financial advisor at your office for more specific information.
  3. Calculate your total at the end of the year. 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 57.5 cents per mile traveled for business.
    • If you drove {{safesubst:#invoke:convert|convert}} for charity and {{safesubst:#invoke:convert|convert}} for business, then you would multiply {{safesubst:#invoke:convert|convert}} by 14 cents and {{safesubst:#invoke:convert|convert}} by 57.5 cents.
  4. Calculate your total deduction. Add up all the deductions from the different categories to determine your total deduction. This yields a result of $140 for charitable travel and $575 for business travel, which equals a total deduction of $715.
  5. Keep your records. The IRS suggests that you keep your records for a period of three to seven years. This is the typical window of audits, so you want to keep your records at least that long, to be on the safe side.

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.

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Sources and Citations

  1. ↑ http://www.irs.gov/Tax-Professionals/Standard-Mileage-Rates
  2. ↑ http://www.irs.gov/taxtopics/tc455.html
  3. ↑ https://www.libertytax.com/tax-resources/occupation/irs-mileage-allowance-rates/

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