How to Track Your Business MilesJan 16, 2023
We've talked about vehicle deductions in previous episodes and how to take the deduction if it makes sense for your business. Essentially, all of the vehicle deductions are grounded in your understanding of how much you use that vehicle for business vs. personal use; and the only way you can document those differences is by tracking your miles!
When the IRS is looking to audit people, vehicle deductions are more likely to be flagged because they know you're likely estimating. Knowing how to properly track and document your numbers can save you a big headache should you ever be audited.
"If it matters enough to you to deduct it, then it should matter enough to document it. And if you want to hang on to that deduction, then documentation is the way to go."
In this episode, you will learn the following:
- Discover how to deduct vehicles from your business in an easy and effective way.
- Learn about digital apps and other methods to accurately track your business miles.
- Find out which type of vehicle deduction--the actual cost method or the mileage method--is most lucrative for your business.
What you'll hear in this episode:
- Can I just estimate my miles?
- How to track your business miles through an app.
- Knowing how many miles you drove in total.
- The mileage method vs. the actual cost method of the deduction.
Here are some brief snippets from this episode:
Vehicle deductions are grounded in you understanding the percentage of miles driven that are business related. One of the elements of that is how you need to be able to track your miles in order to take that deduction. You always have to have really good documentation to prove what you're saying is true.
The IRS does love a good paper mileage log, though. In the digital age, you do have the opportunity to download apps that can help you with this. The frequency at which you're taking business trips is going to be a big variable here.
How do we figure out total miles driven? If you're taking a vehicle deduction and believe this vehicle deduction could be significant in your business, document it. This is one of the most scrutinized areas of your tax return.
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.
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