Do you keep track of your mileage when using your car for business? Why not? Did you know that you’re missing out on a big business expense you could be taking?
Each year the IRS sets a mileage rate. Using this rate, you calculate your expense for the miles you drive your personal vehicle for business. Here are the rates for years past:
- 2019 mileage rate = $0.58/mile
- 2018 mileage rate = $0.545/mile
- 2017 mileage rate = $0.535/mile
By taking this mileage expense there is no need to track how much you spend on gas, tires, oil change repairs, etc. You just keep track of your mileage, then multiply your mileage by the year’s mileage rate.
Calculations When Using Your Car for Business
Let’s look at a simple example. If you drove 210 miles for the week, you would multiply your 201 miles by $0.58/mile. So, your mileage expense would be $121.80.
This is real money! You can legitimately write yourself a check for that expense. That’s right, you can write yourself a check for that $121.80. You’re using your personal vehicle for business, so the IRS recognizes you have expenses associated with that asset.
Now, there are other things to consider such as your personal auto insurance, which may not cover you. It’s important to understand all your risk and exposure. So, make sure you consult with your insurance agent to understand how you are covered by your personal or business insurance. Click the link to find more on the IRS rules on using your car for business.
Tracking Your Business Mileage
A pretty simple way you can put money into your pocket. It just requires you keep track of your miles driven for business in accordance with IRS rules which state:
substantiate your expenses by adequate records or by sufficient evidence to support your own statement.
This means you’ll need to record certain information about each trip as follows:
- Date
- Client
- Destination
- Purpose of the trip
- Mileage
A simple way to do this is using a free smart phone app like TripLog. Tools like this prompt you for the required information, give you needed mileage reports, and tell you how much your expense is for the period reported.
So, what’s keeping you from taking this easy money and break for your taxes? Contact us at Emerick and Company if you have questions about how you can best apply mileage expense to your small business.