Every dollar counts in business, and making the most of your deductions is essential to raising your profit margin when you operate a small business. One area often overlooked where self-employed individuals can save money is mileage deductions.
If you use your vehicle for business purposes, you may be eligible to deduct a portion of your mileage expenses from your taxes. However, understanding what counts as business mileage, how to track it accurately, and how to claim deductions can be complex.
In this guide, we'll cover the essentials of self-employed mileage deductions to help you confidently navigate this aspect of your finances. We’ll also cover how using the best mileage tracking apps like Timeero can simplify the process.
Looking For a Way To Cut Down Your Mileage Expenses?
What Counts as Business Mileage for Self-Employed Individuals?
Understanding what constitutes business mileage is the first step in maximizing your deductions as a self-employed individual.
Basically, business mileage is defined as any miles you cover for work purposes. It is important to note, though, that driving from home to your normal place of business does not count. You can learn more about this from our article on commuting mileage reimbursement.
Let’s take a look at some examples of business mileage:
Client Meetings: Any mileage accrued while traveling to meet clients or potential clients from your home office is generally deductible. Whether you're driving to a coffee shop to discuss a project or visiting a client's office for a consultation, these business miles can be counted towards your independent contractor mileage deduction.
Business Errands: You can also include trips to the bank, post office, or office supply store that are necessary for your business. These errands add up over time, so keep track of them.
Travel Between Job Sites: The mileage you spend traveling between various job sites during the course of the day is usually deductible if your line of work requires it. This applies to various occupations, including real estate agents, contractors, and construction workers.
Conferences and Workshops: Attending industry conferences, seminars, or workshops often involves travel, which can be claimed. Be sure to keep records of your attendance and the business purpose of the event.
Business Meals: While the cost of meals itself may not be deductible, you can claim the mileage incurred while traveling to and from business meals. This includes mileage to restaurants or coffee shops where you meet with clients or colleagues.
Can a Self-Employed Person Deduct Mileage?
Yes, self-employed people are allowed to deduct mileage from their taxes. However, in order to maximize your deductions, you must adhere to IRS regulations and maintain thorough recordkeeping.
According to the IRS, you can deduct the cost of ownership and operation of a car, truck, van, or SUV that you use for business from your taxes. You can use either the standard mileage rate or the actual expenses method to compute this deduction.
The Standard Mileage Rate
The standard mileage rate method is straightforward for calculating mileage reimbursement. It charges a fixed amount per mile for personal vehicles used for business purposes.
To set this rate each year, the Internal Revenue Service (IRS) looks at both fixed and variable auto expenses, including gas prices, car depreciation, and maintenance costs. As of 2024, the IRS mileage rate is 67 cents per mile.
The IRS also provides several eligibility requirements you must meet to use this method. These include:
You should not be operating five or more cars simultaneously (as in a fleet operation).
You must have used only the straight-line method to claim the car's depreciation deduction.
You haven’t claimed a Section 179 deduction on the vehicle before.
You have never claimed a special depreciation allowance on the vehicle.
If you lease a car, you haven’t claimed actual expenses after 1997 for it.
If you choose to use this method for a car you own, you have to do so during the first year the vehicle is made available for use in your business.
The Actual Expenses Method
To use this method, you must determine the real cost of operating a vehicle for business use. This includes car expenses like depreciation, licenses, registration fees, insurance, tires, and gas. We look at these business expenses in more detail in our extensive guide on what mileage reimbursement covers.
The total amount of reimbursement due is then determined by adding up these charges over a predetermined period of time. This method accurately represents the individual costs associated with using a personal vehicle for work-related travel.
Please note that whether you use the actual expenses method or the standard mileage rate, additional vehicle expenses such as parking fees and tolls related to business use are deductible separately.
How Do I Track Mileage for Self-Employed Tax Deductions?
You can track your mileage in two ways; using manual logs or automatically by using mileage tracking apps.
Using Manual Logs
One of the ways to track mileage is by keeping a written mileage log in your vehicle. Create a logbook to record the date, starting and ending odometer readings, and total mileage driven for each business-related journey.
If you choose this method, make mileage tracking a regular part of your business routine. Set aside time each week to record your business-related travel and update your mileage log accordingly.
Be sure to include the purpose of each trip in your mileage log as this information is essential for substantiating your expense deductions in case of an IRS audit. You should also keep all receipts, invoices, and other documentation related to your business mileage expenses.
This includes receipts for gas, maintenance, and any other vehicle-related expenses. You can speak to a tax professional for guidance if you’re in doubt when making your tax return.
Using Mileage Tracking Apps
Apps for tracking mileage, such as Timeero, significantly change how independent contractors handle their business travel. These tools use GPS technology to effortlessly record and categorize each trip.
They track your business trips automatically and compute the total distance traveled, saving you a lot of time and effort. With a few clicks on your smartphone, you can precisely log every mile you drive for work. By doing this, you can maximize your mileage tax deductions and guarantee that IRS regulations are followed.
Why Use Timeero for Self-Employed Mileage Tracking?
Timeero streamlines mileage tracking, allowing you to focus on your business without worrying about tedious administrative tasks. Let's explore the app’s features in detail.
Automatic Mileage Tracking
Timeero's automatic mileage tracking feature utilizes GPS technology to seamlessly capture every mile traveled during business activities. It runs in the background of your mobile device, ensuring that no trip goes unrecorded.
This eliminates the need for manual input and reduces the risk of human error. It also saves time and provides accurate and reliable mileage data for tax cuts and expense reimbursement.
Mileage tracking on Timeero.
Forgot to track your mileage? With Timeero, your employees can manually enter their mileage. 'Require users to input mileage before clocking out' is a company setting that you can enable to allow manual input. Users will be prompted to enter their total miles when they clock out.
Timeero has a manual mileage entry option.
Mileage Calculations
Calculating mileage by hand can be a tiresome and error-prone process. By automating this procedure, Timeero guarantees consistency and accuracy in the totals.
Without doing any additional work, you can get the amount for reimbursement owed when you set your preferred cost per mile in the settings. Self-employed people can benefit greatly from this automation, which also reduces the possibility of mistakes in calculations that could result in financial discrepancies. Check out our guide on how to charge for mileage to help you receive fair compensation from your customers.
Real-Time Location Tracking
Self-employed people can precisely track the whereabouts of their remote teams or subcontractors with Timeero's real-time location tracking. The Who's Working dashboard lets you obtain the most recent location data and see where everyone is.
This level of transparency encourages accountability and trust within your company. It also allows you to respond quickly if there is an emergency or unforeseen event because you can send the employee closest to that location.
Timeero’s Who’s Working dashboard.
Mobile Accessibility
Self-employed people can manage their business and track mileage while on the go with the convenience and flexibility offered by Timeero's mobile app. The app is available for both Android and iOS.
Since Timeero is easily accessible from your smartphone, it allows you to have uninterrupted tracking whether you're at the office, on-site, or on the go. Even better, the app still tracks mileage when you lose your internet connection.
Offline mode involves the app storing all of its data on the device and waiting for the next sync event to send them back to Timeero. For instance, when you clock in and start tracking time on your phone, the phone's database will store an update command containing the updated data.
This data will then be sent back to Timeero for execution during the subsequent sync event, assuming you will have regained connectivity. This allows you to stay connected all through.
You can easily clock in and out of your mobile phone.
User-Friendly Interface
Timeero's user-friendly interface is made to ensure that even individuals with minimal technical knowledge can easily track their mileage. This maximizes user adoption and reduces learning curves with its intuitive design and simple navigation.
The app makes recording mileage and generating reports easy, allowing you to concentrate on your top business priorities.
Suggested Route
The Suggested Route function in Timeero compares the shortest and actual routes to increase accountability. Encouraging employees to take the most efficient routes saves small business owners a lot of money on fuel. It also improves time management because workers get to their destinations quicker.
Timeero’s Suggested Route feature.
Geofencing
Self-employed people can create virtual boundaries around specific locations, like client offices or job sites, with Timeero's geofencing feature. Geofences allow you to set up automatic notifications when your employees try to clock in but are not in those work locations.
If you run a small business, you can use this feature to make sure your employees are where they need to be during work hours. It gives you control over billable hours by blocking your workers from clocking in when they are outside the place of work.
Comprehensive Reporting
With Timeero's extensive reporting features, independent contractors can create comprehensive mileage reports that are customized to meet their unique requirements. These reports offer valuable insights into your business operations, whether you need a summary of your monthly mileage expenses or an analysis of mileage trends over time.
You can find areas to cut costs, maximize your standard mileage deduction, and make informed business decisions by having access to actionable data.
Timeero mileage reports.
Integrations
To simplify things even further for your self-employed business, Timeero integrates with several payroll and invoicing systems. These include QuickBooks, Gusto, Xero, ADP, Paychex, Rippling, Zapier, Vieventium, and Paylocity.
Use Timeero to Simplify Self-Employed Mileage Deduction
Understanding mileage tracking and deductions can help self-employed professionals succeed in the long run. Tracking every mile driven for work is crucial for saving money, and using a mileage tracking app like Timeero can make this process easier.
With features like automatic mileage tracking and customizable reports, it meets the specific needs of self-employed workers. Managing business becomes more efficient without all the tiresome manual processes. Leverage Timeero’s features to track mileage for work and optimize your tax deductions.
FAQs
How Do I Keep Track of Mileage for Tax Purposes as a Self-Employed Individual?
Using an automatic mileage tracking app, such as Timeero, is the most effective way to monitor your mileage. This tool eliminates the need for manual entry by using GPS technology to record every mile traveled while conducting business. With its simple mileage tracking feature, you can maximize your qualifying deductions.
Emily Maina is a tech-savvy writer with a passion for creating content. With years of experience in the industry, she is well-versed in the latest trends and developments in the tech industry. When she’s not working, Emily enjoys exploring the great outdoors or watching her favorite shows.
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