Some people use their cars in a way that allows them to write off the use on their taxes. Does this apply to you?
If you use your car for business, yes; but if you just commute to work, no. Don’t worry, it doesn’t have to be confusing. Here’s how to know when it’s necessary to track your car’s mileage and how to do so.
A Commute to Work
If you’re an employee of a company and drive back and forth to a single job site or office for work, your mileage is not tax deductible. — you don’t need to track it.
However, if you drive to multiple locations within a day, the miles between job sites, clients, or between the office and a store to do errands for work are tax deductible. The IRS will give you a set deduction amount per mile.
You’ll need to keep records that justify the deductions, so be sure to carefully track your mileage and enter the records into a spreadsheet or app, not just in a notebook.
A Car Driven Partly for Your Business
Maybe you own a business or work as a contractor, but you only use your car for business purposes part of the time. For example, you might have a single car that you use to see your business clients but also use to go to the grocery store or run personal errands.
In this case, you can only deduct the miles you use for business, so you only need to track those miles. The miles you drive for personal reasons are not tax deductible. Keep careful records of your business mileage so you get the full deduction you deserve.
A Car Driven Only for Business
If you own a business or are a contractor, but you have a specific vehicle that’s used only for the business, you can decide whether to track mileage or write off your actual car expenses.
When you track, you can write off the per-mile rate for all the car’s use, since it’s only used for business. Alternatively, you can skip mileage tracking and save receipts for your actual car expenses, such as gas, license fees, maintenance, tolls, car payments, depreciation, and more.
If you do have a car that’s used only for your business, make sure you have the appropriate business insurance coverage. Worried about the cost? All you need to do is shop around for the best rate. Freeway Car Insurance has a great reputation for helping people find affordable car insurance, so contacting them could be a great place to start.
Get the Deductions You Deserve!
If you have more than one job location or use your car for business purposes, tracking your mileage can save you money when it comes time to file your taxes.
By knowing when to track your mileage and understanding the tax laws surrounding deductions, you can ensure you get the write-offs you deserve. So don’t wait — start tracking your mileage today and enjoy a lower tax bill at the end of the year.