On the Road Again

Despite the age of technology, where people can work from home in the PJ's, many of us get into our cars daily and drive for work. For me, it is a great change of pace. Finally away from my home office, I look forward to seeing new faces and being different places. Traveling for business, either locally or around across the USA can be fun; but I have found that the process of tracking the expense raises lots of questions. In particular, when chatting with business owners, I hear some strange thought processes around the tracking of mileage. While not a tax expert* I have done some digging and come up with some responses to some of the time honored questions, misunderstandings and just plain wrong thought processes around tracking mileage! (please keep in mind - I am 100% looking at this from the respective of someone who is using their personal car for business use. If your business owns/leases your car for you, then some of this may not apply to you!)

If I track actual auto expense, I don't need to worry about my mileage You can choose which type of deduction you want to take; a standard mileage deduction or an actual cost deduction. Some people fall into the trap of thinking, if I take an actual cost deduction, then mileage doesn't matter. They decide to do this, because, let's be honest, it is easier! However, this thought process is not necessarily true. As you prepare for your taxes, your accountant is going to ask this question: Was this car available for personal use? If so (which for those of us using a personal car for business it almost always is) the IRS will want to know what percentage of the miles driven during the year were for business. The best way to quantify that? You got it! Tracking your mileage! You and your accountant should make a decision about which tracking methods makes the most sense...but either way, you will want to track your mileage! Note: there are special rules and considerations for choosing which deduction is better. Please don't go it alone! Get an accountant involved! This is a prime example of a place where their expertise could save you time, money and frustrations!

I only need to worry about the business miles I drive, not the total miles Again, when preparing for tax season, your accountant is going to ask "what was the total number of miles you drove this year?" So, you will need to produce that information too! Easiest way to do this? Take a picture of your odometer on January 1st. This will give you your ending number for the previous year and the beginning number for the next year. Put this photo (labeled with the date) some where safe.

I only need to track the miles - no need for a "log" One of my first jobs with Task It 2 ME was working with an accountant that was helping a client through an IRS audit. A point of contention for the auditor was that mileage deductions were taken, but there were no logs.  So no, you can not just track the miles - you will want to log the who, what and where. The IRS does a great job of actually giving you some sample logs, letting you know what type information you should keep. You can find it in IRS Publication 463 (there is a link at the bottom of this post)

Finally! My office is no longer my home! Now I can deduct my commute! Um, not really! For some reason small business owners think this is a special rule for them! But, it is not! Think about it this way - if you worked for a company, they would not pay you for driving to work every day. Generally speaking, what you can deduct is mileage above and beyond your normal commute. For example, if you drive 10 miles to work (round trip) everyday; and have a client meeting that is 20 miles away (round trip) then you can track 10 miles for business purposes/potential deduction.

My car has my logo on it...that means all my miles are business! Right? Not exactly. While you may be able to deduct the cost of the wrapping as advertising (check in with your accountant!) the IRS is still going demand the miles are business purpose. So, driving your car wrapped with your logo to your kids ballet rehearsal....doesn't count!

The bottom line is that tracking your mileage is necessary Tracking can be pretty easy, it is all about remembering to do it! As a kid, I always noticed my dad's little notebook in the front console. He would write down every trip that was business related, before getting out of the car. This day in age, with smartphones, there are some great apps out there. Here is a a great article highlighting some iPhone apps. Best Mileage Tracking Apps

If you are a Quickbooks user, there is a mileage log feature you can use - the great part about this feature is that it allows you to bill mileage to a client; or at least track it by clients. A helpful tool in understanding the true cost of doing business with someone! Afraid you are missing miles? At the end of each month, I like to look through my calendar and compare my mileage log. Was there an appointment I forgot to track? If so, I add right away! How do you track your mileage? Or how do you plan on starting?!?

Want to read what IRS says about mileage? then check out this: IRS Publication 463

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*Task It 2 ME is a Personal and Business Assistant Company. At times, at the direction of our clients, we provide bookkeeping assistance. We are not tax professionals. We can not and will not provide legal and/or tax advice. Any feedback and/or comment found in this e-mail or any communications should not be deemed as legal or tax advice. Should you need such advice, please let us know and we will happily refer you to an appropriate professional. Nothing on this blog post, or anywhere on TaskIt2ME.com, should construed a tax or legal advice