Mileage Deduction: Tracking your business miles

The standard mileage deduction is a perfect example of low hanging fruit that doesn’t get taken advantage of often enough by taxpayers. It can be an extremely effective tax savings method, and takes very little time and effort to track annually. However, in order to capitalize on this opportunity, one should ensure they meet qualification standards, know how to properly log and calculate the mileage, and be able to provide supporting evidence each year.

Madison Accountant

Qualifying for the mileage deduction

The Tax Cuts & Jobs Act, introduced in late 2017, presented us with a multitude of changes to the tax law. With regards to mileage itself, the law now prohibits employees from deducting unreimbursed mileage for job-related trips/commutes. That means, essentially, the mileage deduction is only available to those who are self employed and will have a Schedule C on their tax return – contractors, small business owners, etc.

Secondly, the mileage must be related to your business. Many clients are unsure whether their miles qualify as business related, but this can include client meetings, bank runs, supply runs, job site visits, travel to conferences, and much more. What is certainly NOT included, is your commute to and from your normal office or place of work. If you are still unsure, contact your accountant at Watkins & Co for additional guidance.

Tracking your mileage

Most important in tracking your mileage is actually being diligent enough to properly record them. The IRS expects taxpayers who qualify to keep good records if they are to benefit from the mileage deduction. Therefore, keeping some sort of log for these trips is a must. There are several apps available for tracking mileage that allow you to track the miles, as well as give a brief description of each qualifying trip. Just be sure to take those few seconds to enter/write them before you even exit the vehicle.

These apps may also calculate the deduction on the spot. Many small business owners already know their average business miles from year to year and can project their deduction for year end. Fortunately, the standard mileage rate has been increased from 54.5 cents to 58 cents! Simply multiply those miles by 58 cents to get your deduction at the end of 2019. 

Business Miles

Other mileage rates

If you do not qualify for the standard mileage deduction, fear not! There are a couple other instances in which you can claim miles as itemized deductions.

  • Miles driven for medical or prescription drugs purposes: 20 cents per mile (up from 18 cents in 2018)
  • Miles driven in service of charitable organizations: 14 cents per mile

As long as your personal vehicle has not taken any depreciation, and the standard miles are used for business purposes, this deduction is for you! For more information and stipulations on mileage tracking, we at Watkins & Co are experts in determining what qualifies and how to track mileage.

By Ricky M. Hackler

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