Guest Post by Marin Perez
As a small business owner, you’re keenly aware about the importance of minimizing your tax bill by maximizing your deductions. But there’s one write-off you may not be considering: the mileage deduction.
There are costs associated with using a personal car for business purposes that you can deduct from your taxes, according to IRS rules. For instance, the IRS lets you deduct your business miles to help offset those expenses. For 2017, you can write off 53.5 cents for every business mile.
That may not seem like a lot but just think about how often you drive for work reasons to visit a customer, pick up supplies or deposit money at the bank. Those miles add up and are potentially deductible.
Know The Rules
One thing to remember though is that the IRS doesn’t allow you to claim deductions based on commuting miles. But if you have a qualifying home office, your drive from home to your small business is technically an office-to-office trip and can be deducted. Depending on how far you live from your office, this can greatly add to your tax savings.
Besides, if you’re like most small business owners I know, you’re constantly working out of your house. Just section off an area that’s used exclusively for business to watch your deductions add up. You just need to make sure you’re following the rules on home office deductions.
What Documentation Do You Need?
Of course, the IRS will want to make sure you’re following rules for both home office and mileage deductions. That’s why you need to keep maintain detailed records, especially of your mileage. The IRS wants a mileage log that has:
- Your business, personal and commuting miles
- The mileage for each deductible trip
- The start and end location of deductible trips
- The business purpose of the deductible drives
I know what you’re thinking, “I’m so busy already, tracking miles is just something I don’t have time for.” I totally get that. But thankfully, there are many ways to minimize tax season stress while also making sure you’re getting the largest deductions you deserve. There are apps like MileIQ that automatically track your miles for you and create the types of mileage logs the IRS wants.
However you decide to track miles, just remember that for small business owners, every mile you can deduct is essentially money back in your pocket. Why are you leaving dollars on the road?
Contributor Marin Perez is a marketing manager at MileIQ, a service that enables individuals and businesses to efficiently track and report their mileage.
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The information and insights in this blog post are provided for educational purposes only, and do not constitute financial advice from BlueVine. Please consult your financial advisor before making any business financing decision. For information about BlueVine products and services, please visit the BlueVine FAQ page.