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Deduct unreimbursed business mileage

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in Small Business Tax,Small Business Tax Deduction Strategies

Q: My company pays a flat 30 cents a mile rate for car expenses. Can I deduct the difference between my costs and 30 cents per mile? A.Z., Atlanta, Ga.

A: Theoretically yes, but it's unlikely you'll be able to. Here's why: You can deduct your excess cost as a miscellaneous expense on your tax return as long as you provide proper substantiation of your actual costs. But you can only deduct the miscellaneous expenses that exceed 2 percent of your adjusted gross income. Not many people can clear this hurdle. In any case, you don't have to substantiate (or track) your actual expenses if you claim a deduction using the "standard mileage rate" method. For 2004, the standard rate is 37.5 cents for every business mile traveled. So you can deduct 7.5 cents for every business mile. Note: You must complete Form 2106, Employee Business Expenses, to deduct the excess costs.

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