Tips on computing tax deductions on business mileage

When am I allowed to take a tax deduction for business mileage? I use my car for various errands while I work and go from one client to another. Does all of this count as a tax deduction if no one is reimbursing me for mileage? A.C., Indianapolis  

Some people drive to work at the beginning of the day, drive home again at the end of the day, and never put the pedal to the floor in between. Others drive from one location to another, calling on customers and picking up supplies. Still others have two job locations and drive from home to the first location, then on to the second location, then back home again.  

Here are the rules for when those business miles generate a potential tax deduction:  

• Driving from job #1 to job #2. If you work at two jobs, or if your job has two locations, the drive from home to one of the business locations does not produce deductible mileage, nor does the drive from the second location back home again at the end of the day. The middle drive, however, the one that gets you from the first job location to the second job location, is a deductible trip, so keep track of that mileage.  

• Running errands while on the job. If you go to work, then use your car during the day to pick up supplies or mail, transport clients, make deliveries, or engage in any other business-related use, that mileage is deductible mileage.  

• Calling on clients. If you use your car to make calls on clients, customers, vendors, or sales leads, the mileage relating to those trips is deductible mileage.  

• Drive to and from temporary work site. If you have a permanent place of business and are assigned to a temporary work site, and that assignment is expected to last for one year or less, the mileage between your home and that temporary work site is deductible mileage  

Travel from a home office. If you work at home and that home is your regular place of business, and you use your car to go to another work location in the same trade or business, the mileage is deductible.  

Keep in mind that if you work outside the home, commuting mileage between your home and your principle place of business is not considered deductible business use of the car. Also, using the car for personal errands during the working day does not generate deductible mileage. You can, however, use the car for a business-related errand on the way to or from the office, thus making that portion of your commute deductible.  

It’s best not to try to figure out your mileage after the entire year has passed. Instead, track your mileage on a daily basis. This sounds like a lot of work, but it is a necessary part of generating a tax deduction.  

When keeping track of your business mileage, you should keep detailed records showing the date, destination, business purpose, and amount of miles relating to each trip. You can acquire a little pocket calendar or notebook for this purpose, and keep this calendar or book someplace handy, like in your glove compartment, so that you will have it with you every time you drive somewhere. Hint: Keep a pen or pencil in the glove compartment too!  

Take advantage of your mileage record for more than just business miles, because there are other types of mileage you can deduct as well: trips to doctors and driving for charity are examples.  

One final note: when preparing your tax return, you may not get the full benefit of your business mileage. The tax deduction for business mileage is limited by the amount of income you report on your return. The higher your income, the less likely you are to get this deduction.