TechsPlace | It is well known that business miles are deductible on your tax return. Yet few people take the time to log mileage for taxes. Employees and independent contractors are eligible for mileage reimbursement for personal vehicle use. Mileage reimbursement is a way of compensating you for the fuel, wear, and tear placed on your vehicle for business usage. The money from rebates can be substantial.
The standard mileage rates as of 2020 are as follows:
- 57.5 cents for every business mile
- 14 cents per mile driven for charitable or service organizations
- 17 cents for every mile driven for moving or medical reasons
Let’s take a real estate agent who drives about 30 miles a day for work. The 2020 IRS business mileage is 57.5 cents, which leads to a $17.25 a day in tax deductions. The 57.5 miles for business mileage also means that for every 1000 miles, you can deduct $575 from your taxes. That starts to add up pretty quickly, especially if you are driving thousands of miles a year.
As you can tell, there are huge benefits to logging your mileage but yet many fail to do it. Logging mileage should not be difficult today because there are mileage tracking apps explicitly built for logging mileage. This also means that logging mileage on paper logs is either not ideal, even though it’s better than not logging mileage.
A mileage tracking app will let you manually log miles or automatically log miles using your smartphone. These mileage logs can be stored on servers, so you never have to worry about losing them. The mileage logs work by utilizing the GPS on a smartphone to capture GPS points whenever a user moves accurately. Based on the GPS points collected, the app can calculate the distance between the start and end locations. These apps also utilize sophisticated algorithms to determine if a user is driving, so GPS mileage tracking can automatically get kicked on.
There are many benefits to using an automatic mileage tracker:
Guessing your mileage is not the best way to accurately track mileage. Using Google Maps to determine the length of a route or how far you traveled is not the ideal way to record mileage. When audited by the IRS, you will be asked to show proof of mileage, and Google Maps estimates no.
The IRS approved way to track mileage is to record your start and end odometer readings in a logbook. Of course, a much better way is to use an app to track your mileage logs. This approach is much better because your data will be stored in the cloud and less likely to get lost.
If you are guessing your mileage, you most likely will not survive an IRS audit.
Alleviates the tracking burden
Let’s face it; tracking mileage is not the first thing we think about when doing business travel. You are usually thinking about more important things about your work, and remember to log mileage is often not one of those. This is why an automatic mileage tracking app can be beneficial. It takes the burden of remembering to write in your hours off you. It also removes the added weight of carrying a mileage logbook in your car and making sure the logbook isn’t lost or damaged.
Improves work productivity
You have to be focused on the right things. To be productive at work. You weren’t born to track mileage, and you were most likely not hired at your job to track mileage, either. Spending time trying to track mileage is not the most productive use of time. Offloading the mileage tracking chore to a mileage tracking app will improve your productivity. Your attention will be shifted to what’s most important around your business, rather than spending valuable time trying to record mileage.
A mileage tracking app is likely to get you more accurate results than a handwritten log. You are prone to making math mistakes when doing math on the mileage readings. Estimates or guesstimates from Google maps are not acceptable from the IRS. Use a mileage tracking app to track mileage accurately.
Some mileage tracking apps will also show you the exact path you traveled. This can be great to show proof of your actual drive.
Easy to run reports
With a mileage tracking app, you should be able to run reports of your mileage and export it into the accounting software of your choice. This is a huge time saver for accountants and bookkeepers.
Using a mileage tracking app can save you vast amounts of time and money. Failing to track mileage can be very expensive.