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Business owners and employees can claim a mileage deduction on their taxes for certain gas charges. Accurate records of business-related miles driven and receipts for gas purchases are important. Deductions can be claimed for trips to seminars, client meetings, and other business-related outings, as well as trips to the bank, post office, and business-related supply store. Those who work from home can also claim a mileage deduction for work-related trips. Software programs are available to help keep accurate records.
A mileage deduction is a tax option given to owners and employees of small and large businesses that allows them to write off certain gas charges. To participate in this deduction, the owner’s filing must 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 business miles driven was 1,000 (1,610 kilometers) and the rate per mile or kilometer for that year was $0.51 United States Dollars (USD), then the amount of the deduction would be $510 USD.
Applying the deduction to a company’s annual or even quarterly tax reports is generally simple, but accurate records are very important. Many tax experts and accountants suggest keeping track of miles or kilometers before and after business trips, as well as receipts for gasoline purchases. It’s also important to know that not all miles or kilometers used on a commercial vehicle are eligible for a mileage deduction.
Common instances where a mileage deduction can be claimed are travel to seminars, client meetings, and other business-related outings. Business owners can also claim deductions for trips to the bank, post office, and business-related supply store. While most business owners recognize that purchases at these locations can be deducted, many don’t understand that the gas used to get there can also be claimed.
Those who work from home can also take advantage of a mileage deduction on their taxes. A vehicle designated for business purposes is not necessary. What is necessary is that the mileage used is for work purposes. A trip to the store to get extra paper or ink for the printer or a weekly visit to home office are common instances where a deduction can be claimed and often not. Those who work as remote employees may be eligible for deduction claims and should speak with a tax professional about the possibilities.
Tracking business mileage usage can be 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 enter vehicle mileage at the beginning of the year and then simply add it each time they take a business trip. At the end of the year, the miles or kilometers are already added up and the amount of the deduction is quickly calculated. Whichever method is used, it is up to the entrepreneur to keep up-to-date records for accurate presentation.
Smart Asset.
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