Do you need to track business mileage?
Are you a freelancer, business owner, or self-employed? Do you drive your personal vehicle to meet with clients? Or to buy calculator ribbon for your 10 year old adding machine? You might want to track mileage! The current IRS rate is 53.5¢/mile, so that can add up quickly if you drive a lot for business.
You can't deduct mileage to and from your regular place of business and home, but if you go anywhere else for business purposes, you may have a justifiable business deduction. It's not enough to say you drove about 10 miles some time last week to an office supply store. The IRS wants details. They'll want to know the date, your starting and ending locations, why you went there, and the exact number of miles for that trip. Additionally, you should have the starting and ending odometer readings. That sounds tedious, and no one wants to keep an old notebook on the dashboard to keep up with that. It may get lost among the Starbucks cups! But guess what? There's an app for that!
I've used MileBug for years now, but there are so many from which to choose! QuickBooks' newest online product, QuickBooks Self-Employed* will track mileage automatically for you.
Hopefully this feature will be added to all levels of QB soon! If you prefer to keep a paper record or want to just jot down the details in your phone's notes, you can have your phone prompt you every time you pull out of your garage to track your mileage. You can dismiss the prompt if you're running personal errands, but it's a great way to make sure you track every deductible mile. You might also want to track mileage for medical visits and/or charity, both of which have different rates from business mileage. Here's a link to the IRS page regarding mileage rates: https://www.irs.gov/uac/2017-standard-mileage-rates-for-business-and-medical-and-moving-announced
To set up the reminder in an iPhone, make sure your home address is set in your phone as Home. Go to Reminders, and touch the + sign to add a new one. Call it "track mileage" or whatever makes sense for you. You should see a little i to the right of your new reminder. Press that, and you'll be taken to a screen where you can choose to have the reminder at a certain location. Click that slider, then choose Home as the location. Congratulations! Your phone should ding you when you leave for midnight ice cream, to pick up your kid, or most helpfully, when you're running your business.
Unfortunately without the proper documentation, mileage deductions pretty much never hold up if you're audited. Taking a deduction without proof means you could owe not just the difference in income tax you should have paid, but also penalties and interest on that difference.
Email me today for more info or for help recording that mileage in your Quickbooks file!
*QB Self-Employed is designed ideally for freelancers, the gig economy, etc. and may not be a good fit for a larger business. Call me for help deciding the best fit for you and your business.