Realtimecampaign.com Discusses Mileage Tax Deduction and What It Means
Many Americans use personal vehicles to complete work tasks. When doing so, they are often entitled to take the mileage reimbursement tax deduction. However, many of them miss out on this essential deduction because they aren’t sure how to keep track of mileage, what to claim, or how to claim it. This article will offer some information to clear up misconceptions and help to ensure that everyone can get back the money from the IRS to which they are legally entitled.
What Is the Mileage Reimbursement Tax Deduction?
When employees of companies use their personal vehicles for work-related travel, according to realtimecampaign.com, they incur work-related expenses that aren’t covered by their employers as a result. Being reimbursed for mileage helps to make up for those expenses by reducing the amount of income taxes owed by eligible employees. Taxpayers must claim the deduction on their returns, though, which means they will need a basic understanding of how it works.
Who Is Eligible?
The IRS states that any eligible person may claim the tax deduction, including both employers and employees. However, there are some qualification requirements everyone needs to understand. If they aren’t sure about eligibility, taxpayers can find a fantastic read about how the mileage reimbursement tax deduction could help them reduce their tax burdens online.
How to Qualify
What are the mileage tax deduction rules? They aren’t complicated, but there are a few of them. Here’s what eligible taxpayers need to do to qualify for the deduction:
Keep track of the dates when work trips were made using a personal vehicle and what they involved, and provide documentation as requested.
Deduct only the miles traveled for business.
Keep separate logs of work and personal trips.
Deduct miles only when using personal cars, not company vehicles.
Keep track of parking fees and tolls for additional deductions.
Claim the mileage reimbursement tax deduction only if the employer does not pay for the expenses.
Keep detailed records of all business travels.
How to Calculate Mileage Reimbursement
Taxpayers won’t need much to calculate their mileage reimbursements. Just use an app like MileIQ to keep track of the number of miles driven for business purposes, then multiply that number by the IRS’s standard reimbursement rate. Keep in mind that the reimbursement rates can change, and check to see what they are for the previous tax year when filing.
Avoid Trouble With the IRS
Everyone eligible to claim the mileage reimbursement tax deduction should do so, but they should also be prepared to meet all of the qualifications, including requirements for proof of all business use of personal vehicles. Being unable to provide proof in the event of an audit can leave taxpayers in hot water with both the IRS and, sometimes, their employers. The best way to keep track of mileage and avoid trouble with the IRS is to take advantage of tools such as automatic mileage trackers and record-keeping software. There are plenty of excellent options available for independent contractors that are also suitable for employees who want to maximize their tax returns.
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