Extra driving for your job, business or rental can add valuable deductions to your return. For 2008 we may claim 58.5¢ for each deductible mile. The tax tables are in $50 increments. At this rate every 103 miles you deduct lowers your taxes by another step. Every time you find another 103 miles, you reduce your tax!
Business and rental property is easiest. Virtually any driving can be counted. Consider shopping for materials or supplies, dealing with tenants or clients, collecting rents, trips for banking, shipping or office supplies.
In your job we have tougher rules. First, you must be able to itemize your deductions rather than claiming the Standard Deduction. Secondly, your work-related deductions are counted only to the extent they exceed 2% of your total income. Once you pass this “floor” the deductions add up quickly. Finally, you may not claim your driving to or from work – this is a non-deductible commute. Look for non-reimbursed driving for meetings, training, shopping for tools or supplies, visits to customers, trips to other sites during the workday.
In addition to the mileage we can claim any costs for parking or tolls.
IRS insists you keep a record of deductible driving. Although we sometimes can use a reconstruction, it is best to have actual records. This can be simple. A small notepad kept in the car is ideal for jotting the date, purpose of the trip, and mileage.
Try it. Most clients are surprised at how quickly the figures mount up. You’ll be paid for your efforts.