Mileage Deductions – What you Should Know
If you want to save money on your taxes by receiving mileage deductions for business purposes, you need to keep track of your mileage and deliver the appropriate documentation to the IRS.
You can avoid an audit on your mileage deductions as long as you have the correct documentation. If you are using a personal vehicle for business purposes, you can take mileage deductions for anything that is considered a business-related journey. Yes, this does include your commute! If you are self-employed, you can add mileage deductions on your taxes. If you are classified as a W2 worker, however, you will not be able to do so. Are you one of the lucky few who is able to deduct their mileage? If you are, here is what you will need to do:
Keep Mileage Logs
If you are looking to take mileage deductions on your taxes, the IRS asks that you log and record your business mileage, the dates of your business trips, the starting point, the destination, the business purpose, and the total mileage for that year. The best way to do this is to keep a running log that you update every single time that you accrue mileage so that you can accurately keep track of your current total.
You can also look into a mileage tracking application which will track, log, and calculate your mileage for each trip that you take for business. Otherwise, keeping a mileage logbook or any sort of log with all the needed information will do. The important thing is that you must provide documentation of the mileage deductions you are trying to claim.
The IRS has certain requirements when it comes to mileage logs. You don’t necessarily have to keep a mileage sheet or log book, however. The IRS will also accept digital versions of these logs, as long as it has all the information that they need on it. Digital mileage sheets are a lot more convenient and can’t be physically damaged. Log books, however, can.
Use an Automatic Mileage Tracking Applications
These applications can come with devices that will track business cars, use GPS location in order to tell you where your employees are, and produce time reports. You will be able to see real-time tracking of mileage and many other factors in order to efficiently get the accurate numbers to give to the IRS.
These devices are simple and can be put into your business motor vehicle. All you have to do then is download the app in order to see the information you need. Done! It’s easy and simple, as well as convenient. This is a convenient way to get mileage tracked correctly so when it comes time for taxes, you have the real numbers right in front of you – no calculating or estimating of numbers needed!
Keep Gasoline Logs
Some people choose to combine gasoline logs and mileage logs in order to compare and track their overall monthly spending. With both mileage logs and gasoline logs, you will be able to legitimize your mileage and figure out your real fuel efficiency. Either way, it is also good to keep a record of gasoline expenses along with your mileage. The IRS will also allow you to deduct the actual cost of gasoline if you are diligent enough to keep track of the receipts. Gasoline logs will be a good addition to your taxes, and the IRS will appreciate the fact that you are validating your numbers.
Timeero provides modern, affordable mileage tracking software for enterprises to allow you to easily claim mileage deductions on your taxes. Get in touch with us today to see how we can help you save time and money in your employee time and mileage tracking endeavors.