Yes, yes. Next tax season is months away. But that doesn’t mean you can’t prepare now. Indeed, if you are planning on deducting mileage for the use of your car on your tax return, you should be thinking about taxes all year round. You should be keeping track of mileage so that you can have it properly documented for your tax return.
Here are two cases of scenarios that allow you to deduct mileage on your tax return:
Personal use for your job
If, as an employee, you are required to drive your car for your work, you can deduct mileage. However, it can only be mileage that is not reimbursed for the company. For example, if the IRS lets you take a deduction for 50 cents a mile, and your company reimburses you 35 cents a mile, you can only claim the 15 cent difference on your tax return. You can’t be reimbursed on mileage that your company is reimbursing you for.
The first thing Kyle should know is that the IRS raised the mileage rate as of July 1 for the remainder of 2008. The first six months of 2008 will be at 50.5 cents per mile and the last six months of 2008 will be at a 58.5 cents per mile. For anyone computing business mileage, you will need to make two computations – one for each part of the year.
Obviously, the rising cost of gas is being taken into consideration by the government in its calculations.
Self-employed car use
Even if you are not someone else’s employee, you can still deduct mileage on your tax return. Keep track of how far you drive for your business, and you can enter it on your tax return as a business expense.
For more details on how to go about deducting mileage on your tax return, consult an accountant or a tax attorney.