Business executives whose work involves a lot of travel get reimbursed for their travel-related expenses, by the company they work for. More so, they can also receive tax benefits on submitting his mileage expenses. Therefore, knowing how to compute mileage expenses is of utmost importance.
Maintain Your Travel Records
Whichever method you use to calculate mileage from destination to destination, you need to maintain records of your travel, like toll receipts, fuel receipts, etc. You may have to submit these at your place of work.
In order for you to get a reimbursement, you need to submit a detailed and accurate report, else the organization would have a hard time during the audit. In case you don't have to submit these for reimbursement, you could get a tax deduction for the same. So, don't miss out on a good opportunity to save money.
You need to record the following:
- The date of travel and purpose
- Beginning and final mileage (from city to city)
- All gas receipts and receipts of all fees including tolls and parking
- All maintenance costs including oil changes and repairs
Methods to Work Out Mileage Expense
In this method you need to keep track of the actual expenditure for business and subtract the depreciation, at the stipulated rate. This method is beneficial if you have a new car. It will have higher depreciation and relatively lesser miles.
Standard Mileage Expense
In this method, multiply the business miles by the standard number. Then, add in tolls, parking charges, and business percentage of finance fees. This method is beneficial for high mileage, low maintenance vehicles.
Submit Your Report
Follow the stipulated norms that need to be followed for submitting your report. In fact, you can find free report templates on the Internet. Download one, and you can reuse it every month. Once you have filed the report, make sure that you keep the bills safely in your possession.
It could seem a way too complicated for those who have a very busy and hectic lifestyle. In this case, it is advisable to simply consult a CPA. If the expense on a CPA seems worth the effort, you may as well hand him your records for further calculation.