If you own your own company, or own rental property, the IRS actually gives you two ways of tracking your business mileage:

• Track all your mileage and all your automobile expenses, including gas, oil, maintenance and depreciation. Use your mileage records to figure out the percentage you drove your car for business. Multiply this percentage by your expenses to figure out your business related automobile expenses.
• Track just your mileage for business related purposes. Multiply your mileage by the IRS business mileage rate to compute your business expenses. The rate for 1997 miles was 31.5 cents per mile. We won't know what this year's mileage rate is until the tax forms are published next year.

When recording business mileage, you must track your mileage, your destination, and the business purpose of each trip. You must also record the date of each leg of the trip. Figure A shows an example of correct recording of business mileage in Trip.

FIGURE A

This is the way to record business mileage in Trip.

Non-Profit, medical and adoption miles
For mileage that is related to non-profits, churches, medical expenses, or adoption related expenses, the IRS does not allow you to deduct the full cost of your travel, but only the gas and oil expenses. Like business related expenses, the IRS gives you two ways to do this.

• Track your gas and oil expenses and all your mileage. Use your mileage records to figure out the percentage you drove your car for non-profit, medical or adoption reasons. Multiply this percentage by your expenses to figure out your related gas and oil expenses, or
• Track your mileage for non-profit, medical or adoption purposes. Multiply this by the IRS non-profit mileage rate to compute your expenses. The rate for 1997 was 10 cents per mile.

The mileage, the purpose of the trip, and the name of the organization which you were representing must be recorded on every single trip for non-profit purposes! Using Trip, you can set up a category with the name of the organization. Simply putting the trip in that category will qualify it as being labeled with the name of the organization. Figure B shows the correct way to record non-profit related mileage.

FIGURE B

This is the way to record a non-profit trip.

Notice that the organization name is a category entered in the top right corner of the screen.

Confused?
How about an example? Lets say you record 2,000 business miles for the year and 1,000 non-profit miles. You drove a total of 10,000 miles for the year, and recorded gas, oil, maintenance, insurance, registration and depreciation expenses of $4000. Of that $4000, $1000 were gas and oil.

Method 1, actual expenses
Your business use percentage is 2,000 miles / 10,000 miles = 20%. So, business expenses = 20% X $4000 = $800.

Your non-profit use percentage is 1,000 miles / 10,000 miles = 10%. Non-profit expenses = 10% X $1000 (gas and oil only) = $100.

Method 2, using the standard deduction
Business expenses = 2,000 miles X 31.5 cents = $630. Non-profit expenses = 1,000 miles X 10 cents = $100.