2018-08-13 By Maya Pillai
For employees and entrepreneurs whom must occasionally travel in the course of their duties keep an excellent track of their business mileage, but for the rest of the rest of us, however, this can be an overwhelming task. But if you fail to keep track of these records the right way, this could mean missing out a significant tax deduction. Similarly, you might be lucky and take away the inferences and get audited successfully. However, when it comes to the actual deductions, you will have to prove your mileage to IRS with documentation. Therefore, to make the inferences, you must capture all vital information in your millage since you cannot deduct what can’t be proven.
The Right Way to keep commercial Mileage Records
The IRS requires that you have accurate and timely records. This implies that you need to keep a daily log to show miles covered, endpoint and the business purpose. To this end, automating such process can be helpful to keep track of your travels and record the required data. This way you, you can also note the date you are traveling, the starting points and destination. You can also note down the actual mileage or add it to an online map program available through the internet. Attentively, it is advised that you include all expense like parking and gasoline as well as the amount spent especially if you opt for actual auto expenses, instead of claiming IRS mileage deduction.
Separate Your Business Miles
If you are well connected to your smartphone, various track and trace system pharmaceutical applications are available to help you keep track of your mileage. For the poised options, they will even help you to separate the personal and business miles. If you happen to be using the same vehicle for personal and commercial uses, it is required that you keep track of your mileage in the begging and the ending of every year. This measure allows you to work out the business-use in percentage. For instance, if you have logged a total of 24000 miles and the business purpose log indicates that you covered 6000, then your business use is 25%.
Reporting your Mileage
The next step entails covering the obtained information on your schedule C in your commercial tax returns. When it comes to communicating your mileage, there are two primary methods, which include the standard and actual approaches. For both methods, each has its takeaways and drawbacks and some restrictions for the actual reporting. If we can use actual auto expenses, you will have a 25% dedication if you happen to have covered 6000 out of 2400 miles for the business. Otherwise, this would mean that you would have to multiply the 6000 figure by a standard IRS rate to obtain a value close to 54% as per 2018. To this end, it is evident that it is possible to earn significant returns through the tax deduction. Therefore, it is vital that you keep a record of this vital information by ensuring that you always keep track of your mileage the best way possible.