As of the 1st of this year, the IRS lowered the 2017 standard mileage rate from the 2016 rate, changing the percentage of your driving expenses that have the ability to be deducted from your taxes.
You will now get 53.5 cents per mile driven for business (as opposed to 54) and 17 cents per mile driven for medical/moving purposes (as opposed to 19). That means it is even more important to get your business miles logged, and to keep them logged correctly.
“Business miles are a grey area of the tax code, where most taxpayers have a lot of trouble in an audit,” Director of Tax Kristina Yarbrough said. “IRS agents will typically take an average that you calculate on a 60-to-90 day basis.”
There are many different approaches to calculating the number of business miles to deduct on your taxes. Rather than doing a rough estimation of a certain mileage percentage for the whole year, try these suggestions to keep the guess work out of your taxes:
1. Create a log—Manually keep a log, tracking every business mile you register (excluding your commuting miles). Using the percentage of miles driven for work during that time, you can apply this estimate to your annual use and it will give you a more accurate reading for your tax return
2. Use an app—If you want a quick, easy and mindless way to keep track of your mileage, now all you need is a smartphone and an app like MileIQ.
For example, MileIQ is a free application that runs on the background of your phone. It notes each time you get in a car and automatically tracks the number of miles you drive without even having to open the app.
After you arrive at your destination, you simply swipe to clarify if the ride was for business or personal matters.After cataloging your rides, it will also calculate the values of your drive at the IRS standard mileage rate, giving you even more insight into your taxes and deductions. You can read more about MileIQ and how to download it here.
This average you get from either manually writing it down or using an app must include only normal business days—not once-a-year trips that added unusual mileage.
“This is a very tedious process, but necessary if you do not want to lose some or all of your business miles in an audit,” Yarbrough said.
Keeping accurate tabs on your business mileage will not only make your deductions more exact and help prevent you from being audited, but can also save you valuable time and money. For more helpful mobile tools to save you time, visit our blog page Mobile Tools for On-The-Go Practice Management.