Did you know that there are around 1.3 billion dollars in unclaimed refunds in the United States for Tax Year 2017 alone?
Yours may be there as well, sitting and waiting just for you. If you use a car for business purposes, you may be entitled to a Mileage Tax Deduction on your Federal Income Tax Return for up to three years in hindsight. In this article, we’ll go over some key criteria for an unbeatable Business Mileage Deduction.
Whether you’re searching for a self-employed Mileage Deduction, Reimbursing your employees for Business Miles, or running a Small Business, you’ll need to keep a Mileage Log for your Business Tax Return. There are simpler and more difficult techniques to them, but first, let’s look at the fundamental contrasts between trip purposes:
What is the difference between business and personal mileage?
Objects of Business Use:
- Attending a business meeting or conference
- Driving to a client
- Having a business lunch with a client
- Getting work materials from a supermarket
- Medical needs
- Running business-related errands
Objects of Personal Use:
- Commuting between home and the Company’s headquarters
- Personal shopping
- Attending a family event
- Driving to the cinema/theatre
- Gym or other sporting activities
It’s crucial to understand that you must monitor both Business and Personal Trips in your Mileage Log in order to calculate the ratio of Business and Personal Miles.
You can simply determine the ratio of business and personal travels using MileageWise’s AI-based AdWise function, so you receive suggestions for forgotten trips Retrospectively, auto-populated to fill in the gaps for your 100% IRS-Proof Mileage Log.
Mileage Log Step-By-Step
1. Standard Mileage Rate or the Actual Expense Method: Which one to use?
Taxpayers have the option of choosing a calculating technique. It’s important to remember that you can’t switch methods inside the same year.
- Standard Mileage Deduction: This is the simplest method since all you have to do is keep track of how many miles you drive for business in a year and multiply that by the IRS’s Standard Mileage Rate, which is 58.5 cents in Tax Year 2022. It can add up to $12,000 every tax year based on the typical business mileage reported on taxes. You won’t be able to deduct any operating expenditures on the automobile if you choose this option (maintenance, fuel, insurance, etc.)
- Actual Expense Method: If you don’t think you’ll be able to get the most out of the Standard Mileage Rate, the Actual Expense Method is also an option. Although you have the chance to deduct all of your automobile expenditures based on the ratio of your business miles, collecting all of the receipts for repairs, registration fees, refuelings, lease payments, garage rent, depreciation, licenses, insurance, tires, tolls, and parking fees takes extra time.
FACT: If you have 5 or more automobiles, you must select the latter option.
2. Record your odometer readings at the beginning and end of the tax year
Do you have problems remembering your previous odometer readings? You can quickly calculate them with MileageWise’s Past Odometer Reading Calculator. You’re set to go if you know your vehicle’s original and current odometer readings, as well as its Actual Fuel Consumption.
3. Mileage Tracker App and Web Dashboard vs. Pen & Paper
You may keep track of your Business Miles in a variety of ways: You can keep track of your miles using a paper journal, a Google / Excel spreadsheet, a printed Mileage Log Template, or an Automatic Tracker App that includes a Web dashboard.
Reconstructing your log on paper, especially retrospectively, might be tough. There are several fixed data and events that you must remember and accurately record in your mileage log. It is a low-cost option, but at the end of the day, you will undoubtedly ask yourself: “Is it worth it?”
Even GPS-enabled mileage trackers are occasionally inaccurate since they can only track real-time driving and cannot be used to reconstruct or create records retroactively.
How can I regain my past business miles?
MileageWise helps you compensate for your lost Mileage Logs. Your suggested logs will be well-built and IRS-proof, meeting all expectations, thanks to the AdWise function, which checks and corrects 70 logical contradictions.
After you’ve rebuilt your Retrospective Mileage Logs, you may manually track your journeys with MileageWise.
Watch this video to learn more about how we reconstructed past mileage:
Is it possible to keep track of my miles while on the go?
Absolutely. The MileageWise Mileage Tracking App offers Automatic Tracking based on the requirements, experiences, and comments of real-life drivers. It also has no unnecessary features, so your journeys will be automatically identified without using your data or battery. MileageWise values privacy: The Automatic Mileage Logging App accurately follows you while not continuously tracking your travel, only at the point of your arrival.
Do you have a tight deadline?
Outsource the management of your mileage log to us to save time!
Read also: Filing Your Small Business Taxes for the First Time? Here’s What You Need to Know