You need to keep a log if you want to legally take the business expense.
Driving around town? If it has something to do with business, you might be able to get a tax deduction come tax-time or a reimbursement from your employer.
Business owners and the self-employed know the value of keeping track of their business mileage but many are negligent in keeping a log that documents their travel. Your Enrolled Agent or tax preparer will ask to see that log when you provide your records at your tax preparation appointment.
It is annoying to manually log the details of every drive and it takes time to record the date, destination, miles traveled and all that. So, we have put together our top 3 apps to make this task easy.
Just to keep you in the know… here are the standard mileage rates allowed by the IRS:
As a rule of thumb, don’t even consider using actual costs if you use your vehicle less than 50% of the time for business. The standard mileage deductions keep things simple if you keep track of all your miles.
When you use your car for business, the IRS allows you to deduct that expense from your taxable income.
The standard mileage deduction rate depends on how you used your vehicle:
- Business miles are reimbursed at 53.5 per mile
- Medical and moving miles, 17 cents
- Charitable miles 14 cents
And commuting to work is not considered a deductible expense.