top of page
Search

Understanding Business Mileage: What Applies and How to Make It Work for You

Writer's picture: Maria AlvarezMaria Alvarez

Tracking business mileage is essential to managing expenses for self-employed professionals, small business owners, and even employees in certain roles. However, understanding what qualifies as business mileage and how to handle it correctly can save you time, effort, and potentially money during tax season. Let’s break it down.



Straight road in the desert.

What is Business Mileage?

Business mileage refers to the distance driven in a personal or company vehicle for work-related purposes. This does not include commuting from home to your regular workplace, as this is considered personal travel. Instead, eligible business mileage includes trips like:

  • Traveling to meet clients or customers.

  • Driving to business conferences, training sessions, or networking events.

  • Picking up supplies or materials for business use.

  • Traveling between multiple work locations.

Why Track Business Mileage?

Tracking business mileage accurately can lead to significant tax deductions. In the U.S., for example, the IRS allows businesses to deduct mileage at a standard rate (set annually) or actual vehicle expenses. These deductions can reduce taxable income and improve cash flow, making your business operations more cost-effective.

How to Calculate Business Mileage Deductions

You generally have two options for calculating deductions:

  1. Standard Mileage Rate

    • Multiply your total business miles by the IRS-approved mileage rate for the tax year.

    • The standard mileage rate is designed to cover fuel, maintenance, insurance, and depreciation.

  2. Actual Expenses Method

    • Track all vehicle-related expenses, including gas, repairs, insurance, and depreciation.

    • Determine the percentage of vehicle use attributable to business purposes (e.g., if 60% of your mileage is for business, you can deduct 60% of your vehicle expenses).

What Doesn’t Qualify as Business Mileage?

Certain trips, even if they seem related to work, do not qualify as business mileage, such as:

  • Commuting to and from your regular workplace.

  • Personal errands or travel that combine personal and business purposes (only the business portion of the trip may qualify).

  • Travel during personal time that isn’t tied directly to business needs.

Best Practices for Tracking Mileage

Proper documentation is key to claiming mileage deductions. Here’s how you can stay on top of it:

  • Use a Mileage Tracking App: Apps like MileIQ or QuickBooks Self-Employed automatically track and log trips, making it easy to distinguish between business and personal travel.

  • Maintain a Mileage Log: If you prefer manual tracking, record the date, purpose of the trip, starting and ending locations, and total miles driven for each business-related trip.

  • Keep Receipts and Records: Save receipts for fuel and maintenance in case you choose the actual expense method or need to verify your deductions.

Key Tips for Compliance

  • Regularly review IRS guidelines or consult a tax professional to stay informed about mileage rules in your jurisdiction.

  • Keep your records organized and accessible in case of an audit.

  • Be consistent with your chosen method (standard mileage or actual expenses) for the entire tax year.

Remember, every mile counts

Maximizing your business mileage deductions starts with understanding what qualifies and maintaining accurate records. Adopting smart tracking methods and staying compliant with tax regulations can save money and streamline your financial reporting.

Remember, every mile counts—so start tracking today and let your journeys fuel your business growth!

Recent Posts

See All

Comentarios


NGLCC_certified_LGBTBE.png
  • twitter
  • linkedin
  • facebook

©2019 by Maria Alvarez. Proudly created with Wix.com

bottom of page