When it comes to business-related travel, every mile counts—literally. Keeping track of your mileage can translate into significant tax deductions, helping to lower your taxable income and keep more money in your pocket. However, to take full advantage of this opportunity, you need accurate records and a clear understanding of what qualifies as deductible mileage.
Here’s what you need to know about tracking mileage for tax purposes.
What Qualifies as Business Mileage?
Not all driving counts as deductible business mileage. The IRS allows deductions for mileage related to:
- Client Meetings: Driving to meet clients or vendors.
- Work-Related Errands: Picking up supplies or making deliveries.
- Temporary Work Locations: Traveling to a temporary job site or location.
- Conferences and Training: Attending industry events or continuing education sessions.
Important: Commuting from your home to your regular workplace is not deductible, but driving to a temporary worksite or client location may qualify.
How to Track Your Mileage
The IRS requires detailed records of your business mileage to claim deductions. Your log should include:
- Date of the trip
- Purpose of the trip
- Starting and ending locations
- Number of miles driven
You can track this information manually in a notebook, but using a mileage tracking app can save time and ensure accuracy. Popular apps like MileIQ or QuickBooks Self-Employed automatically record your trips and categorize them for tax purposes.
How Much Can You Deduct?
The IRS sets a standard mileage rate each year for business travel. For 2023, the rate is 65.5 cents per mile. If you drove 1,000 business-related miles, that’s a potential deduction of $655!
Alternatively, you can calculate the deduction using actual expenses (gas, maintenance, depreciation), but most small business owners find the standard mileage rate simpler and just as beneficial.
Why Tracking Mileage Matters
Accurately tracking your mileage not only helps you claim deductions but also ensures you’re prepared if the IRS requests documentation. Without proper records, you risk losing out on valuable deductions or facing penalties during an audit.
Simplify Your Finances with Basso & Guida
At Basso & Guida, we make tax season easier by helping you uncover every deduction you’re entitled to—mileage included. Whether you need help setting up a tracking system or preparing your tax return, our team is here to guide you every step of the way.
Ready to maximize your deductions? Contact us today to schedule a consultation and discover how we can help you save time and money on your taxes.
