How to Keep Track of Your Business Mileage?
Whether it’s driving to work, running errands for your business, or medical trips across the river, those extra miles might be hurting your wallet, but have no fear, we have some ways for you to cash in on some savings! For business owners, employees, and regular people alike, tracking your mileage could save you some extra cash on your tax return.
Who can deduct miles on their tax returns?
Bad news first. If you didn’t notice last year, there was a change for tax years after December 2017 in what employees can claim for their miles. According to the IRS website, “Employees who use their car for work can no longer take an employee business expense deduction as part of their miscellaneous itemized deductions reported on Schedule A. Employees cannot deduct this cost even if their employer does not reimburse the employee for using their own car. However, certain taxpayers may still deduct unreimbursed employee travel expenses, this includes Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials.”
Self-employed / Business owners
If you’re self-employed you’re in luck! For mileage tax deductions, those who are self-employed have access to the highest deduction rate and the fewest restrictions. This year, there was a 3.5 cent increase in the amount deductible from the previous year, raising it to 58 cents per mile. Depending on the situation, you also could be able to add in other expenses such as tolls and parking, just make sure you talk it over with your tax consultant first.
Even if you’re not self employed or using a company car, you can still profit off tracking your miles. As of 2019, you can get 20 cents per mile for medical expenses. For all of us on the Illinois side of St. Louis, driving to those hospital visits or doctor appointments across the river can add up during the year, so might as well save some money and report them on your Schedule A. Along with medical miles, you can also get 14 cents per mile driven in service of charitable organizations. The catch here is that YOU must be doing the service and not just dropping the kids off.
Tracking your miles is especially important if you or even people you know are going to be entering the Uber/Lyft industry. All those miles of driving people around will rack up on your car and will impact it in the long run. Reporting your trips and miles will help you get every penny possible out of your tax return to help with those added miles.
Methods to tracking mileage -
Depending on if you are self-employed or keeping track of mileage for your LLC, S-Corp, etc. you’ll want to find a way to keep track of the mileage.
Pen & Paper - This one just requires you keep a pad of paper or at least put it in the notes in your phone. However, if you decide to manually track mileage, just make sure to write down 4 pieces of information for every business trip: the date, why you’re traveling, your point of origin, and your destination. You can calculate and add the actual mileage later if you would like. While this method is probably the most basic, it could be the easiest to forget.
Apps - These days, there REALLY is an app for everything, and yes, that even means tracking your mileage and trips. There are many apps that you can either start whenever you get into your car or keep running and later you can go through and categorize them as business mileages. The important thing is to make sure that you separate personal and business mileage.
Keeping these records comes in handy if you were to ever get audited by the IRS and need documented logs of dates traveled, the destinations, and the reasons for travel. So, you might want to think twice before you try to claim those summer road trips across the country on your return.
Have some questions about what you should report this upcoming tax season? Give us a call! We can be reached by phone at 618-281-9700 or 417-833-8811 or by email at firstname.lastname@example.org. We would be more than happy to answer your questions and help you get the most out of your return!
Sources: https://money.usnews.com/money/personal-finance/taxes/articles/everything-you-need-to-know-about-claiming-a-mileage-tax-deduction , https://www.thepennyhoarder.com/save-money/mileage-tracker-apps/ , https://www.irs.gov/newsroom/heres-the-411-on-who-can-deduct-car-expenses-on-their-tax-returns , https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2019