• Document mileage, gas purchases and upkeep expenses to obtain reimbursement for the use of your own car for business.car image by maxuser from Fotolia.com
  
  The IRS sets standard reimbursement rates for employees and self-employed individuals who use their own vehicles for business. Rates for 2010 are slightly lower than in past years, reflecting lower costs of transportation. Properly document our business mileage and follow any other rules regarding business mileage reimbursement as dictated by your employer to avoid confusion when you submit your invoice for compensation for your traveling expenses.
  
  

Standard Business Rate

• The IRS states that the standard mileage rate for the use of a car for business is 50 cents per mile driven, as of January 1, 2010. This rate reflects a study by an independent contractor of the average costs of operating and maintaining a vehicle.
  
  

Optional Rate Calculation

• The standard mileage rate is optional. Taxpayers also have the option of calculating the actual business costs of the use of their vehicle instead of using the IRS standard mileage rates. If an employee chooses to compute their own automobile costs rather than using the standard mileage rate, it would include costs associated with lease payments or depreciation, maintenance, repairs, tires, fuel, oil, insurance, and license and registration.
  
  

Reasons for Deducting Mileage

• Employees can deduct mileage and automobile expenses due to use for business only. They may not deduct any costs associated with personal use.
  
  

Documenting Mileage

• Adequate records must be provided to qualify for a business standard mileage rate. Records must satisfy the accounting practices of the employer. If the employee is not required to substantiate expenses to the employer or if the employee keeps any amount beyond the expenses, it is not considered a mileage reimbursement.
  
  

Mileage Allowances

• Some companies will set a mileage allowance, which is a payment by reimbursement or other expense arrangement if the employer anticipates regular automobile expenses for business. A mileage allowance should reflect a reasonable amount that covers the expenses incurred by the employee. It can be paid as a standard mileage rate or another rate or schedule mutually agreed upon by the employer and employee.
  
  

Included Vehicles

• The business standard mileage rate can be applied to an automobile that a taxpayer owns or leases, including cars, vans, pickups or panel trucks.
  
  

Items Not Included in Standard Mileage Rate

• Parking fees, tolls, interest associated with the purchase of the vehicle and taxes for local personal property can all be deducted separately from the standard mileage rate by taxpayers using their vehicles for business.
  
  

Limitations on Standard Mileage Rate

• Automobiles used for hire, like taxis, or five or more automobiles leased or owned by a taxpayer and used at the same time, are exempt from using the standard mileage rate.