Taxes can be complicated, especially if you’re a small business owner. Unfortunately, many self-employed individuals end up not claiming deductions that could significantly reduce their tax bill. One area that is particularly confusing for many small business owners is mileage. As small business accountants in Gilbert, we would be happy to help you navigate your deductions in 2019.
Do I Qualify for a Mileage Deduction?
For employees, the cost of commuting cannot be deducted. Due to the Tax Cuts and Jobs Act of 2017, they also cannot deduct the expenses of miles driven outside of their standard commute through December 31, 2025. However, for self-employed small business owners, driving that is directly related to your business, such as meeting with a client, may be deducted.
Every year, the IRS sets the standard mileage rate to determine the amount you can deduct. The standard mileage rates for 2019 are:
- 58 cents/mile for business (it was 54.5 cents in 2018)
- 20 cents/mile for medical (it was 18 cents in 2018)
- 14 cents/mile for charity (no change)
Why It’s Important to Track Miles
If you are a small business owner, you could potentially save thousands of dollars on your tax bill with a mileage deduction. Yet if you don’t have sufficient support to prove your miles, then you cannot justify it and the IRS will disallow it. If you plan on claiming a deduction for the use of your personal vehicle, it’s imperative that you keep a detailed log. This will be especially important in the event that you’re audited.
For your log, the IRS requires:
- Mileage
- Dates of the trips
- Places you drove
- The purpose of each trip
How to Track Miles (Without a Notepad in Your Car)
You don’t want to miss out on potential deductions, but you also likely want to avoid the tedious task of writing down all this information on a notepad in your car. Keeping a log the analog way runs the risk of losing all your data as well. Fortunately, in this day and age, there is a technological solution to every problem. We recommend using an app to track your business miles to put yourself in the best position to receive a deduction.
Best Apps for Tracking Miles
MileIQ
Every month, MileIQ allows you to track 40 trips for free. This means that some businesses will be able to get away with using the free version. In addition, it permits you to link trips together, which is helpful in the event that you stop on the way so you don’t have to log one trip into two legs. You receive a monthly report every month that you can then save for your tax file.
Stride Tax
Stride Tax is free, and you can use it to track other business expenses as well. This makes it simple to keep all your deductions in one place. It also offers the ability to preload categories and explanations so you can categorize your rides. In addition, it offers a map that shows exactly where you drove.
TripLog 2.0
The basic features of TripLog are free, and the more advanced features (autostart and cloud backup) are a low price. TripLog also helps you save on gas expenses by estimating your gas mileage and locating stations with the lowest gas prices.
As a small business owner, you want to maximize your deductions in any way you can. Don’t leave money on the table — make sure to get the maximum mileage deduction in 2019. If you need help with your taxes, call the top small business accountants in Gilbert. Contact BASC Expertise today.