The expense of driving to and from your next client meeting may cost you a tidy sum. In fact, sales professionals dish out a number of expenses to each year to win over their clients. Barring the wear and tear of your vehicle, the use of your personal vehicle for work requires more money spent on your car. All things considered, it’s important salespeople take advantage of qualified tax deductions, specifically a mileage deduction. Below is the answers to your mileage deduction questions and ways to maximize your tax write off this year.
Traveling is a requisite for most sales professions. Between establishing new business relationships to obtaining orders, salespeople spend a majority of their time out of the office and in their personal vehicles. Luckily, salespeople may deduct mileage if an employer does not reimburse at the IRS standard mileage rate. In general, a self-employed sales rep or commissioned-based employee can track business miles and earn big savings when tax season rolls around.
Our tax experts at MileIQ often get asked this question: Is a commute to and from work tax deductible? The answer, in most cases, is always no. Whether you’re a business owner or sales professional, your drive from home to your main job is not considered taxable income. The IRS commuting rule clearly defines which trips warrant mileage deduction and those that do not. Typically, the only time you can deduct mileage between your home and another work location is if you have a tax deductible home office that is routinely utilized. In this case, you can also deduct miles driven from your home office to customers’ offices.
Hands down the best way to track mileage in 2022 is with a mileage tracking application. A paper mileage log might have been your go-to option in years past, but nowadays there are applications like MileIQ that make mileage tracking simple and straightforward. As one of the most affordable mileage tracking apps on the market, drivers know they are getting a good deal with guaranteed accuracy. If 4.6 stars on the Apple App Store isn’t proof enough, MileIQ lets users enjoy a free trial with up to 40 drives to start.
Since salespeople are often paid a portion of their earnings in commissions, it’s important to know additional tax deductions they can take aside from mileage. These costs usually involve business expenses such as accounting fees, promotional marketing, cellphones, and computers. Some sales professionals can even deduct 50% of expenses on food, beverage, tickets and entertainment for hosting a client.
Whatever expenses you decide to claim, make sure each one is backed by proper documentation. Keep receipts, invoices, and credit card statements that support the amount you claim. For mileage, MileIQ makes precise logging easy with weekly and monthly reports of your mileage. By the time tax season arrives, you’ll have all the records you need to write off total miles driven.
Interested in learning more about tax deductions for salespeople? Read our article on business calls and find out if the commuting rule applies.