I work for a company that pays $400.00 in expenses a month towards mileage and up keep on my car. I drive way over what I get a month. How do I handle this at tax time?
This will be my first year to keep track of the miles I drive and what I get from the company. Some weeks I put over 500 miles on my car. How do I keep track of this, so I don't take a loss either way at tax time and throughout the year?
By Cindy from Willy, PA
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All I can recommend is keep a record of where you go and the miles to and fro. Keep all your gas receipts. Keep reciepts for any maintenance. These three things you will need when you do your try to claim your expenses.
If I remember right you have to list the travel compensation as extra income on an itemized tax form. You would probably do best to pay for your taxes to be prepared because there may be other tax breaks for you with regard to your traveling for work. But I would definitely keep the three things I mentioned above.
Try to keep a hard copy of the requests for travel. If you normally only get an email telling you to go somewhere, print it. If you get a work order that you can't keep, copy it. The gov. loves paper trails. And the more proof you have of where you have been and why the better off you are.
Use TuroTax to do your taxes; the software will walk you through it.
Your employer is paying you, if they are doing it properly, under what is called an Accountable Plan. At least quarterly they should be asking for you to complete a form whereby you can substantiate your actual miles driven (they are multiplied by the cents per mile that IRS has designated for the year-in 2009 it was 55 cents per mile) or the percentage of the costs incurred in owning and maintaining your vehicle that can be attributed to business miles.
Definitely do the mileage log thing. If you can find a log book that lets you put personal and business mileage in separate columns, that would greatly simplify matters. And I think it goes without saying that receipts for insurance, gas and maintenance go in a file folder or other storage. Scan this to your computer if that works better.
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