Tracking Business Mileage to Your Advantage
It may sound a little unbelievable but one of the secrets that a business can become successful is if they are working smart. And, one way of being smart is making sure that a business gets a lot of advantage when it comes to tax deductions. This is one of the main reasons why many businesses employ a fleet tracker. They make sure that they can get deductions even with the miles they incurred for their business.
Business Miles Equal Money
The IRS or the Internal Revenue Service know that you will have to pay for a lot of costs when you use your personal car for business purposes. This is why they developed a standard deduction of mileage rates. The rates for 2018 are as follows:
- 54.5 cents for every mile used for business purposes
- 18 cents for every mile used for medical reasons
- 14 cents for every mile used for charity purposes
The rates were different last year and it can change in the coming years too. So, you have to verify with the authorities if you want to make sure that you are following the right rates.
54 cents might not look like a lot of money saved. However, if you look at the big picture, that is actually a big money saving. Let us say you are averagely driving 100 miles every week for any business-related activities. Potentially, you could have up to $2,800 of tax deduction just for mileage in one year! The only thing that you need to do in order to achieve this is to track your mileage in a standard way that the IRS approves.
Properly Tracking the Business Mileage You Drive
Obviously, the IRS would not accept it if you just tell them carelessly about the number of business miles you have driven. They need data and facts. So, you need to create and organize proper documentation that can back up your claims to get a deduction. This is what we call a mileage log.
Here are a couple of things that should be present in the mileage log.
- Trip mileage: This is the total number of miles driven for a particular trip. Take note that it is not based on what is shown on the odometer. It means the actual number of miles for the trip alone.
- Dates: This is a no-brainer. You need to include the exact dates of the trips. If you can, you can also record the time just in case.
- Location: There is also a need to stipulate the starting point and the end point of the trips. You do not have to write down the exact address. You just have to make sure that the location is more specific and it is clear.
- Purpose: Of course, you would have to take note of why the trips can be considered as business-related.
The IRS will also need a log of the miles you drove for personal reasons. All of these things will really become easy if you have an app that acts as a fleet tracker to make the recording more accurate and hassle-free.