How to Calculate Mileage Expense

"Barney is a top-notch executive and a hi-tech firm. He needs to travel a lot for business and gets reimbursement for his traveling expenses, from the company. More so he also receives tax benefits on submitting his mileage expense. His friend Marshal is a small time businessman who spends a major amount of his money on traveling. He does not get any tax deductions."

Don't you think that the lack of tax deductions is unhealthy for Marshal's business? He needs to know how to compute his mileage expense. I am sure that the mere mention of tax benefits has perked up your ears. Let's see how to calculate mileage expense.

You Need to 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. This may be required to be submitted at your place of work. In this case, 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 it for reimbursement, you could get a tax deduction for the same. So, don't miss out on a good finance opportunity, keep records right!

You need to record the following:

• The date of travel and purpose
• Beginning and ending 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

You Need to Know the Methods to Work Out Mileage Expense

Actual 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. Another time when it is beneficial is, when you have an older car. This car should have high maintenance expenses.

Standard Mileage Expense: In this method, multiply the business miles by the standard number (.55 per mile for 2009). Then, add in tolls, parking and business percentage of finance fees. This method is beneficial for high mileage, low maintenance vehicles. Or, it could also be great in case of a very complicated reporting system.

Submit Your Report
Follow the stipulated norms that need to be followed for submitting your report. In fact, you can find free reports on the Internet. Download it, you can reuse it every month. Once you have filed the report, make sure that you keep the bills safely in a box and out of the way!

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.

This is where I sign off, after giving you detailed information on the topic. Just make sure you save the receipts and know the methods and you should be set!