As self-employed individuals or business owners, you have the opportunity at hand to get reimbursed for qualifying business expenses. One of the biggest savings you’ll find comes from vehicle costs, such gas, depreciation, and repair and maintenance. For these reasons, each year the IRS permits eligible taxpayers to deduct vehicle expenses through the actual expense method or standard mileage deduction. What this means — if you regularly drive your car for work-related purposes, you have the option to write-off these costs on your tax return.
However, in order to take the mileage deduction, you must implement mileage tracking into your daily routine. Years ago this consisted of a notebook and pen along with the consistent reading of your odometer. But today, millions of taxpayers are taking advantage of mileage tracking apps that automatically log all business miles driven. If you’re unsure of how to get started or want to better understand what mileage tracking is, the following tips and tricks will help open the doors to your tax savings possibilities.
Downloading a mileage tracking app is by far the simplest method of tracking business miles nowadays. Not only that, it’s both time-saving and cost-effective. With MileIQ, you don’t have to remember to start or stop tracking after you’ve completed a drive. With the app’s innovative software, business owners and self-employed individuals can keep going about their day without stressing over accurate reporting. In addition, by the time tax season arrives, you’ll have all the information you need to take the mileage deduction.
Tip: Leave manual logging in the past. Human error and daily distractions can get in the way of logging, which is why mileage tracking apps are now used by millions of drivers worldwide. It’s simply your best security for steering clear of misreporting on your taxes.
In short, no. But this doesn’t mean you won’t benefit from keeping track of mileage. Not only does it help you earn big savings on your tax return, it also gives you peace of mind and a clear indication of the wear-and-tear on your vehicle. Not to mention, the IRS runs every tax return through a number of processes to look for tax mistakes. If you end up getting caught for misreported mileage, the first thing they’ll request is adequate records to back your claim.
Tip: Don’t report mileage unless you have the records to prove it. Many people try to underestimate, or worse, overestimate mileage without proper documentation.
In recent years, we’ve seen an increase in IRS audits over reported mileage. This means the IRS is cracking down on unusual claimed business expenses. If the IRS finds you don’t have sufficient records of the claimed mileage on your taxes, they may request an amended version or charge you a fine. At length, it's simply not worth the hassle nor the bad reputation with the IRS.
Tip: You can easily avoid this common tax mistake by signing up for a mileage tracking application. That way, you’ll have all the proof you need in the case of an audit.
As one of the easiest to use and most affordable mileage tracking apps on the market, it’s no wonder why 1 million+ users have downloaded MileIQ onto their smartphone or tablet this year. For $5.99 a month, users can enjoy unlimited drives and mileage logging as well as monthly reports of total miles driven. The best part is the app costs nothing to download. You can get started at any time and begin tracking your business or personal drives. But MileIQ knows some drivers might be hesitant to try out a mileage tracking application, especially if they've never logged mileage for tax purposes. That's why they allow all new users to enjoy a free trial with up to 40 drives before officially signing up for a monthly plan.
Tip: Looking for a better deal? Consider upgrading to the annual plan for $59.99, which is a $12 savings for the year. On average, MileIQ has helped reimburse over $10 billion for active users.