If you are among those people who don’t know how to reduce tax bills just by tracking your drives or are not aware of the science of all this, let us begin by giving you the good news: You can considerably lower your tax returns just by keeping a log and maintaining all of your drives on the road. To help you achieve this goal by the end of each year; when the time comes to face the IRS over your tax filings, one of the most reputable and reliable mileage tracking service – MileIQ – is helping many people around the globe lowering their driving-related tax deductibles. So, let us guide you throughout the process which will describe to you:
- Why mileage tracking matters for small businesses
- What mileages are considered by IRS for tax deductibles
- How MileIQ helps in saving taxes on mileage
So, let’s learn to save some considerable money
Why Mileage Tracking Matters for Small Business Owners -:
A small business owner understands the importance of saving up even a single penny, let alone an entire tally of a couple of hundreds to thousands of dollars. When it comes to tax filing each year this becomes all the more meaningful for small businesses because even the little costs can add up to become a huge amount by the time you had to submit your taxes to the IRS. Therefore, it is necessary for small business owners to utilize every means possible where they can obtain tax deductions on their tax bills. In the States, the IRS allows taxation reliefs on certain types of drives (e. g. using personal vehicle for business purposes).
So, having this option at their disposal, small business owners can deduct some tax obligations upon the drives they undertake. Tax deductions that are related to business drives are known as “Business Mileage.” So, by properly keeping a track of your mileage, those of your employees, and properly differentiating between personal and business mileage, you can save considerably in business mileage tax deductions. To achieve this goal, the best way is to use a reliable mileage tracking and logging service which will intelligently keep a log of your mileages, differentiating between personal and business mileage, and keep a succinct track of all the drives you undertake.
What Mileages are Considered by The IRS for Tax Deductions -:
While as a business owner, a person will save mainly on “Business Mileage” deductions but let us tell you that this ain’t the only category IRS consider when it comes to tax deductions for drives. There are various other types of mileage-based tax deductions that an individual, or an overall business for that matter, can easily avail from the IRS. The three main categories are charity, business, medical, and moving-based mileages tax deductibles in the US. The sub-category of mileages that are eligible for tax-deduction within these three main categories are as follows:
- Drives undertaken for important supplies and errands.
- Drives undertook for interviews and job-seeking.
- Drives undertaken between temporary contractual works and jobs.
- Drives undertook for business purposes between different branches of a single company.
- Drives undertook to entertain customers or to get mandatory meals for them.
- Drives undertook to airports for business purposes.
- Drives undertaken for medical supplies or for medical emergencies.
- Drives undertook for charitable purposes (e. g. attending charity events, driving for charity, driving to organize charitable events, etc.)
So, these were some of the major areas, in regards to mileage-based tax deductions, where an individual or an organization can obtain considerable tax relieves. Also, the rate per mileage for deductions by IRS is set to $54.5 cents as of 2018, a price which changes with each beginning year. You can review standard mileage rates for all types of drives here on the official IRS website. Now, in our final segment, let us discuss the most important aspect of this all: How a mileage tracking/logging service will help in mileage-based tax deductions (such as MileIQ)? Read on!
How MileIQ Helps in Saving Taxes on Mileages -:
Before telling you why you should use MileIQ, one of the most reliable mileage tracking/logging services online, and how it can help you save money; let’s talk a little bit about what cloud-based mileage tracking services are. In easier words, a good web-based mileage tracking/logging service does all the tracking and logging work automatically. These services provide portals both for desktop and mobile version for their users, on which they need to create an account of their own and set it up according to their preference. One of the greatest benefits of using a cloud-based mileage tracking service, especially for small business owners, is that they can get a whole enterprise package and allow both themselves, and the drives taken by their employees, tracked, and logged to distinguish the value and tax-deductible amount on each drive undertaken every day.
This is also good because it completely rules out the possibility of human error. Of course, we do not always have the time and freedom to keep an accurate notebook of all the drives we have undertaken in a year, do we? Plus, there is always a chance of making errors while jotting down the details with a pen-and-paper method, therefore, succumbing to a cloud-based automated business mileage tracking service, like MileIQ, is the best option out there.
So, how MileIQ really works then? Well, once you create your account and set up your preferred details, the application works in the background and keeps on logging and tracking all of your drives. It will create a complete record of all the drives (eligible for tax deduction and reimbursable) undertaken throughout the year. When the time comes for tax filing to the IRS, you can attach this complete record of your reimbursable business, or other eligible mileages, with your tax files.
In terms of setting up a drive for tracking and logging, all you need to do is to just add the vehicle to drive, the location from the start to the end, and the purpose of the drive (e. g. business or personal) and you are good to go! Plus, the interface of the online dashboard and the mobile application of MileIQ is made pretty easier to use and intuitive as well (just swipe and change the drive type easily). And there are tons of other useful features/options present in MileIQ which lends some great help for individuals trying to get tax deductions on mileages, and again, as we mentioned many times above; this service is supremely beneficial for small business owners whose salvation depends mainly on how much they end up saving. So, try out MileIQ and see what difference it does make in reducing your tax returns.