Did you know that if you travel for your business, you could be entitled to deductions on your federal taxable income? The Internal Revenue Service (IRS) allows taxpayers to deduct mileage expenses or actual automobile expenses that you incur when traveling for business purposes. To claim these significant deductions, you will want to track your mileage and expenses as explained below.
Where to Track your Business Mileage
The first step of tracking your business mileage is to determine how you would like to keep track of your business trips throughout the year.
Electronic Record Keeping – Cell Phone Apps, Excel spreadsheet
Physical Record Keeping – Notebook in the Glove box
If you frequently travel for business, we recommend using an electronic method to record your business trip. However, if you rarely travel for business, it might be easier and more efficient to keep a solitary notebook in your vehicle for the occasional trip.
Tracking your Business Mileage
The second step to realizing your business deductions, you will need to record the following for each business trip and each vehicle separately:
Date of the Trip
Starting Location & Ending Location of the Trip
Purpose of the Trip
Number of Miles Driven
Tracking your Automobile Expenses
Lastly, you should keep track of expenses spent on your vehicles including gas, insurance and repairs & maintenance. Make sure to keep receipts of these associated expenses for at least three years in case your deduction is called into question.
Don’t Wait Until the Last Minute
The IRS requires these logs to be recorded at the time of the trip rather than reconstructed later. Don’t let these deductions slip through the cracks! Determine which method of record keeping is best for yourself and stick to it to capture those significant tax deductions.