As a business owner or employee, you may be entitled to claim tax deductions for mileage that you incur while driving for work purposes. This is known as business mileage. It is important to keep track of your business mileage and properly document it, as it can save you money on your taxes. In this blog post, we will discuss what business mileage is, why it is important to document it, and how to do so effectively.
What is Business Mileage?
Business mileage refers to the distance that you travel for work purposes. This includes travel to and from work, as well as any other travel that is necessary for your job. Some examples of business mileage include:
Traveling to meetings or client visits
Traveling to a job site
Traveling to purchase supplies or equipment for your business
In order to claim tax deductions for business mileage, you must be able to prove that the mileage was incurred for work purposes. This is where documentation comes in.
Why is it Important to Document Business Mileage?
Properly documenting your business mileage is important for a few reasons. First and foremost, it allows you to claim tax deductions for your mileage expenses. If you don't keep track of your business mileage, you may miss out on valuable tax deductions.
In addition to saving money on your taxes, documenting your business mileage can also help you keep track of your expenses and stay organized. It can be easy to lose track of all the miles you've driven for work purposes, especially if you have a busy schedule. By keeping accurate records of your business mileage, you can have a better idea of your overall expenses and make more informed decisions about your business.
How to Document Business Mileage
There are a few different ways to document your business mileage, but the most accurate method is to use a mileage tracking app or device. These tools automatically track your mileage and can provide detailed reports on your business travel. Some popular mileage tracking apps include MileIQ, Everlance, and Hurdlr.
If you prefer a more low-tech approach, you can also use a paper mileage log. This involves manually writing down the date, purpose of the trip, and distance traveled for each business trip. It is important to be as detailed and accurate as possible when using a paper mileage log.
Regardless of the method you choose, it is important to keep your mileage records organized and easy to access. This will make it easier for you to claim your tax deductions and provide evidence of your business mileage if necessary.
Tips for Documenting Business Mileage
Here are a few tips to help you effectively document your business mileage:
Keep all of your mileage records in one place. This could be a physical folder or an electronic file.
Make sure to record all of your business mileage, not just the long trips. Even short trips can add up and be worth claiming as a tax deduction.
Keep track of the purpose of each trip. This will help you prove that the mileage was for work purposes.
If you use a mileage tracking app or device, make sure to double-check the accuracy of the tracked mileage.
If you use a paper mileage log, be sure to write legibly and include all necessary information.
Keep your mileage records for at least three years. The IRS may audit your tax return and request to see your mileage records, so it is important to have them on hand.
Claiming tax deductions for business mileage can save you money on your taxes, but it is important to properly document your business mileage in order to do so. By using a mileage tracking app or device, or keeping a detailed paper you can properly document your business mileage and get the deductions you’ve earned.
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