As a business owner, keeping track of your mileage is not only important for tax purposes but can also save you a significant amount of money. However, with so many IRS rules and regulations, it can be confusing to know exactly what you should be doing. Fear not, for we have compiled the top 10 IRS rules every business owner should know about mileage tracking. In this article, we will explore each of these rules in more detail and provide tips on how to stay compliant while maximizing your deductions. Whether you’re a seasoned business owner or just starting out, understanding these rules can help you save money and avoid any potential IRS issues.
So let’s dive in and learn about the top 10 IRS rules every business owner should know about mileage tracking.
- You Can’t Deduct Commuting Miles. The IRS defines commuting as the miles you travel between your home and your regular place of business. Unfortunately, these miles are not deductible, so don’t waste your time tracking them. However, there are some exceptions to this rule. For example, if you have a home office deemed as your tax home and you travel from your home office to another business location, those miles may be deductible. If, however, you are traveling from your home office (tax home) to another business location for work purposes, the mileage for that travel is generally deductible. On the other hand, if you are traveling from your home office to a regular work location (a place where you realistically expect to work for more than one year), then the commuting mileage is not deductible.
- You Can Deduct Business Miles. One of the most important IRS rules you should know about is that any mileage you travel for business purposes, such as meeting with clients or attending a conference, can be deducted at the current 2023 rate of 65.5 cents/mile. Make sure to keep accurate records of the date, destination, and purpose of the trip. In fact, keeping a detailed log of your business miles can help you save a significant amount of money on your taxes.Keeping a detailed log of your business miles can be tedious, but MileageWise can help simplify the process by automatically recording your trips and generating reports for you. This can save you time and help you claim all the deductions you’re entitled to.
- Record Your Starting Mileage. To accurately track your business miles, you need to start by recording your starting mileage for the year. This will allow you to calculate the total miles you drove for business purposes. You can do this by writing down the odometer reading on the first day of the year and subtracting it from the odometer reading on the last day of the year. MileageWise can help you accurately record your starting mileage for the year and track the total miles you drove for business purposes. This can help you calculate your deductions and keep your records organized.
- Keep a Mileage Log. The IRS requires you to keep a mileage log that includes the date, destination, purpose, and miles driven for each business trip. Keeping a detailed log of your business miles can help you avoid mistakes and ensure that you’re claiming all the deductions you’re entitled to. You can use a mileage tracking app like MileageWise to simplify this process and ensure that your logs are accurate and 100% IRS-proof.
- Separate Business and Personal Miles. It’s important to keep your personal and business mileage separate. If you use your car for both personal and business purposes, make sure to record the mileage separately. Not keeping track of your personal miles can cause problems if you get audited. In addition to the mileage log, you should also keep a personal mileage log to show the IRS that you are not trying to deduct personal miles as business miles. It’s best to be as accurate and detailed as possible in your record-keeping to avoid any issues with the IRS.With MileageWise, you can effortlessly differentiate between your personal and business mileage. By automatically tracking your trips, MileageWise classifies each one as either personal or business, making it simple to separate them. This feature is a game-changer for those who use their vehicle for both personal and business purposes, as it eliminates the need for manual calculations and record-keeping. With accurate categorization of your mileage, you can ensure that you’re taking the correct deductions and avoiding any potential issues with the IRS.
- Don’t Forget About Parking and Tolls. In addition to deducting your mileage, you can also deduct any parking fees and tolls you paid while on business trips. Make sure to keep receipts and record the amount paid. These expenses can add up quickly, so it’s important to keep track of them.By utilizing MileageWise, you can conveniently keep a record of all your expenses, comprising parking fees and tolls. This mileage tracking application permits you to upload and store your receipts directly in the app, making it much easier to access and maintain records of your expenses.
- Keep Your Records for 3 Years. The IRS requires you to keep your mileage records for at least three years. Make sure to keep your records organized and easily accessible in case of an audit. You can keep your records in a mileage tracking app like MileageWise, which allows you to store all your mileage data securely in the cloud.
- The IRS Can Disallow Deductions. If your records are incomplete or inaccurate, the IRS can disallow your mileage deductions. That’s why it’s important to keep detailed and accurate records of your business mileage. By using a mileage tracking app like MileageWise, you can ensure that your records are accurate and compliant. By using a 100% IRS-Proof mileage log that MileageWise provides, you can avoid any issues with the IRS that could result in disallowed deductions and ensure that your records are accurate and compliant.
- Use Technology to Your Advantage. Technology can make tracking your mileage a lot easier. Mileage tracking apps like MileageWise can automatically record your trips and generate reports for you. This can save you a lot of time and help you avoid mistakes.
- Consult a Tax Professional. If you’re unsure about the IRS rules and regulations regarding mileage tracking, it’s always best to consult a tax professional. They can provide you with guidance and ensure that you’re taking advantage of all the deductions available to you. A tax professional can also help you determine if you’re eligible for any special deductions or credits that you may not be aware of. With MileageWise, you can easily generate reports and share them with your tax professional to ensure that you’re taking advantage of all the deductions available to you.
In conclusion, keeping track of your mileage is a crucial part of running a business. Not only can it save you money on your taxes, but it can also help you make better business decisions by providing you with valuable insights into your driving habits.
By following the top 10 IRS rules we have outlined above, you can ensure that you’re accurately tracking your business mileage and taking advantage of all the deductions available to you.
MileageWise is here to help and make the tax season effortless. By using the app, you can easily track your business mileage and separate it from personal miles. The 100% IRS-proof mileage log ensures that your records are accurate and compliant, helping you avoid any issues with the IRS that could result in disallowed deductions. Whether you need to keep track of parking fees and tolls or want to generate reports for your business trips, MileageWise is here to simplify the process.
And if you’re ever unsure about the IRS rules and regulations regarding mileage tracking, the support team is always available to assist you. Why not simplify tax season by letting MileageWise take care of the work for you?