Standard Mileage Allowance
For 2012, the standard mileage allowance is 55.5 cents per business mile (beginning in 2013, it will be 56.5 cents). For writers, editors, illustrators, researchers and all other business owners, this means for every business mile you drive, you are allowed a standard mileage allowance of 55.5 cents per mile – no receipts necessary! It doesn’t matter what the trip actually costs, this is the allowed business expense amount. To audit-proof the deduction, you must establish the business purpose for the mileage (driving to the library to do research, meeting with an interviewee or your editor, attending a workshop) and you need to document the mileage from your driveway to the activity and back.
Here is what I suggest you do: Buy a small, spiral-bound day calendar notebook (one day per page) and put it in the glove compartment. When you leave your driveway for business purposes, pull out the notebook and jot down the odometer reading on that day’s page. You can also set the trip odometer to capture the total mileage (if you’re math-challenged) to write at the bottom of the page when you return. But it’s very important to have the beginning and ending odometer readings. Why? If you are audited and have a significant mileage deduction, the examiner may request third-party documentation from you to verify your odometer readings throughout the year (oil change receipts, dealership repair bills). When your notebook odometer readings tie into those third-party documents, you will have gone a long way toward substantiating your business mileage expense. And finally, before leaving the driveway, note on the same page the business purpose for the trip. The location (library) and the name(s) of those you met with would be good, too.
When you remind yourself that every two business miles will generate a tax-deduction more than one dollar (or $19.43 per business gallon on a 35 mpg vehicle), you will be motivated. Even short trips mean money in your pocket. Document them all. Plus, in addition to the standard mileage amount, you may also deduct parking fees and tolls incurred while on business. At the end of the year, you will need the total miles driven on your vehicle and the total business miles driven on that vehicle to complete your tax return.