How much do you drive for business? Credit PittCaleb.
Lately I’ve been driving a ton to meet coaching clients and later this month I’ll be attending WordcampLA, which will add more business related miles to our 97′ Civic.
I don’t know what I’ve been thinking, but I haven’t captured a single mile to deduct for self employment taxes. It’s time to log those miles and remind all my self-employed readers to do the same.
Why Deduct Miles?
In short, it’s smart business practice to log and take the mileage deduction for each mile you drive for self-employment business purposes. [If you have a boss your employeer may reimburse mileage directly–check with your benefits or HR department to get the details.]
If you are operating a personal vehicle for business purposes the IRS gives you tax break at the end of the year. That’s great since small business is America. For 2012 the deduction is $0.55 per mile, so check with the IRS as this rate changes yearly.
Those milage deductions add up and help to offset the high cost of gas, insurance, tags, registration, plus all the wear and tear your vehicle is enduring with each grueling mile. You won’t end up ‘making money‘, but it will help offset the costs of vehicle operation.
How to Log Your Mileage for Business
Don’t log the miles on the back of a Starbucks napkin you found lying in the floorboard–that’s not going to fly with your accountant or in the event of an audit. Purchase a mileage log or just print out a standard form like the one below.
Mileage and Taxes
Make sure you’re following the rules set forth by the IRS. If you have a home office, the miles start counting once you leave your driveway to meet a client. Those who have an office can’t count miles commuting to the office.
Also, you can’t take mileage and depreciation on the same vehicle. Tolls and parking can also be included under certain guidelines. For specific rules and questions consult the IRS or your CPA.
Apps to Log Miles
I’m sure some of you will write in the comments, “There’s an app for that.” So let’s just state that numerous paid and free apps exists for the i-Phone and Android. If you have one you use and recommend, let us know in the comments.
Start Logging Those Business Miles
Small business owners, freelancers, contractors, whatever you call yourself–we all need a break from the higher taxes we pay. Track and take advantage of the mileage you already drive to make your business happen.
How do you track miles for self-employment? Any wisdom you want to share?