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One Very Important Deduction You Could be Missing on Your Taxes

February 8 // 5 Comments // 5 Minute Read

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If you haven't been tracking your mileage, you could be missing out on some big tax deductions for both business AND personal drives! This in-depth post break downs all the mileage deduction rules, including what you can deduct, and by far, the best app I've found to easily keep track of everything.

This post is sponsored by MileIQ, however, all opinions and miles driven to Starbucks are 100% mine.

This post may contain affiliate links. Read my full disclosure policy here.

If you haven't been tracking your mileage, you could be missing out on some big tax deductions for both business AND personal drives! This in-depth post break downs exactly how mileage deduction works, what you can deduct, and by far, the best app I've found to easily keep track of everything. It's unbelievable how much money you can legally write off, every year!

If you haven't been tracking your mileage, you could be missing out on some BIG tax deductions at the end of the year. Yes, you!!

Mileage deductions are typically thought of as a business-only benefit, but they're available to everyone depending on what you do or where you go. You just need to do two things….

  1. Know the rules for each deduction.
  2. Keep extremely detailed records for every trip you take.

Sounds like more hassle than they're actually worth, right?

Well, that's certainly what I used to think. Both Joseph and I have had plenty of opportunities to track mileage with all of our eligible business and personal trips….and believe me, it's not that we haven't tried.

We've kept notebooks in the car, cute little printables at home, and spreadsheets on Google Drive, but it finally became such a hassle to remember to record our mileage, that we basically shrugged it off and said it wasn't worth doing. Tracking mileage was basically one more thing to keep tabs on our already jam-packed to-do list.

So we didn't.

Until our CPA gently reminded us how much we were missing out.

Now that I've realized what kind of impact mileage deductions have on our overall taxes, I'm done losing out on money I can legally write off. I don't want you to keep missing out either!

This in-depth post break downs exactly how the mileage deduction works, what you can deduct and for how much, and by far, the best app I've found to easily keep track of everything. My goal is to make this complicated portion of the tax code is an absolute no-brainer so you can stop paying the government any more than you have to.

Ready to get started?

How the Mileage Deduction Works

If you're not familiar with how deductions actually work {let's be honest, the entire tax code is pretty confusing!}, deductions reduce your taxable income. So let's say you make $60,000 per year, and you have $20,000 in deductions. Now you only get taxed on $40,000, not $60,000, thus making what you owe to the government, a bit more bearable.

Adding mileage to your list of deductions pushes that taxable number even lower so you owe less. Basically, the more you claim, the more you save!

One Very Important Deduction You Could be Missing on Your Taxes | Creative Savings

What Type of Driving Qualifies for a Deduction?

Let's dig into the nitty gritty detail of what's covered, and what's not. Note: These are 2016 standard mileage rate numbers I'm using.

FOR EVERYONE:

  • Medical Expenses — Any time you drive to and from the doctor's office, hospital, or to pick up a prescription, you can deduct $.19 per mile. However, there is a teensy catch. Only medical expenses {mileage + bills + copays, etc} that add up to more than 10% of your adjusted gross income can be deducted.

Here's an example:

Let's bring back that $60,000 number and say that's what you made for the year. If your medical expenses are $5,000 {under the 10% threshold of $6,000}, you can't deduct anything. But if expenses are $7,000, you get to deduct $1,000. Make sense?

  • Charitable Expenses — If you drive to and from a non-profit as part of a volunteer activity, you get to deduct $.14 per mile. It's not much, but every little bit counts! FYI: You cannot claim this for driving a child to a volunteer activity…..just the adults.
  • Moving Expenses — If you're relocating for work at least 50 miles away or more, you can deduct $.19 per mile. However, you do have to work full-time for at least 39 weeks during the first 12 months after you move to claim it.
  • Freelance Expenses — Those that babysit, petsit, do lawn care, or participate in some sort of other odd job, get to deduct all of the drives to and from those locations. And the deduction rate is $.54 per mile!

One Very Important Deduction You Could be Missing on Your Taxes | Creative Savings

FOR BUSINESS OWNERS:

Those who own their own business get to also take advantage of the $.54 per mile rate, and it covers quite a bit.

  • Errands and Supplies — Any time you need to run to the bank, office supply store, or post office, you can write those drives off. All those little trips really add up!
  • Meals — Have a meeting with a friend or business partner to discuss business? Write off your trip for coffee, drinks, and/or dinner.
  • Travel — Drives to and from the airport, or to another place of business qualify too.
  • Customer Visits — If you have a job that requires you to meet with customers, you know what to do…..write it off!

Heads up — commuting from home to a permanent work location is not deductible in any way. It's considered a personal expense and the IRS is very strict about this — so don't test it! You can find more details on that HERE, plus how to handle mileage driven to a temporary work location {if you expect to work there less than 1 year}.

The Easiest Way to Track Miles

As I've said before, mileage deductions can be a pretty huge boost during tax time, but the truth is, most mileage records are not adequate enough, and therefore denied by the IRS. Remember, they have to be extremely detailed! The best app I've found that satisfies these strict requirements is MileIQ.

mileiq-screenshots

MileIQ is basically a tracking app that runs in the background on your smartphone. It automatically registers every drive, and when you're done with each trip, you just classify that drive as business or personal, and file it under the category it belongs with one swipe.

Now I know what you're thinking…..what if you don't want MileIQ to track every drive? Not all drives are going to be deductible, but the point of this app is that it tracks every drive so you never forget. 

MileIQ highly recommends that you keep track of all your driving so you have complete records to show the IRS. Because when it comes right down to it, the IRS wants to know how many miles {business and personal} you drove during the year, and actually requires this detailed information when you file your taxes.

With MileIQ, you get 40 FREE drives a month, but if you're out and about more than that, you'll want to upgrade for just under $60 per year. Plus, use code CREATIVESAVINGS20 {make sure it's all caps}, and you get 20% off your subscription! {Psst….those who have their own biz, you can totally write this expense off too.} Here's more info on how to redeem your promo code.

Although I've already submitted all my tax info for 2015, I'm super excited to track all my miles this year and see the major impact this has on our 2016 taxes. The best part? No time consuming mileage logs or spreadsheets to deal with!

Do You Currently Track Your Mileage?

Want more tips for how to manage money better? Check out this page for 60+ more tips!

 

mileiqMileIQ increases mobile productivity for the modern workforce, and is committed to saving you time, money, and peace of mind through their streamlined mileage tracking app. Learn more about MileIQ HERE.

Disclosure: Some of the links in the post above are affiliate links. This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. Read my full disclosure policy here.

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Comments

  1. Jessica Bowman says

    March 15 at 8:58 am

    Cool-sounding app! But, with it running in the background all the time, does it drain your phone battery? I had heard such great things about Waze, so I downloaded it. But it runs ALL THE TIME and totally drains your battery and eats your data, so I promptly uninstalled it! I don’t need to know about the flaming mattress in the middle of the road THAT badly.

    Reply
    • Kalyn Brooke says

      March 15 at 9:19 am

      I actually had the same concern when I first started using it! From what I found on MileIQ’s website, it takes very minimal battery life to run. I’ve been testing it for the past 3 weeks and honestly haven’t noticed a difference in my battery at all. I’m not sure if different phones would react differently though — I’m not a techie! — but with my iPhone 5c, it was fine.

      And I totally LOL’d with the flaming mattress…..so TRUE!

      Reply
  2. Rachel Cooper says

    March 28 at 12:49 pm

    I commute a total of 70 miles a day to and from work…would this be considered tax deductible for business?

    Reply
    • Rachel Cooper says

      March 28 at 12:50 pm

      Actually I just reread a portion of your blog again…it’s not! Bummer.

      Reply
      • Kalyn Brooke says

        April 1 at 9:36 am

        Sadly, you are correct. 🙁

        Reply

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Hi, I’m Kalyn—a recovering perfectionist who nerds out about organizing systems, personal productivity, and helping you prioritize what matters over the pressure to do it all. I have a feeling we’re about to become the best of friends! Learn more >>

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👩‍💻 | I help value-driven women lead manageable + meaningful lives.
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Psst… I use pencil just in case I change my mind and want to switch things around! ✏⁣
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Even though we won't be spending Christmas in the RV, I just had to put up a few decorations to enjoy before we leave! 🎄⁣
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Q: Are you staying home for the holidays or going out of town?

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So when you take time to address those needs and care for yourself, remember that it's not selfish. It's just wise.

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Are you ready for Turkey Day tomorrow? Although I’m not hosting this year, I’m helping my sis-in-law prepare and contributing my Creamy Parmesan Mashed potatoes and a cherry pie (Joseph’s request) ☝ to the menu. ⁣
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No one cares if you spill blueberries for the fruit salad all over the floor (true story) or you pull a too-jiggly peanut butter pie out of the fridge because it didn’t set right (also a true story). Those are just extra memories you can add to a table already brimming with abundance...and gratitude. 🍽Q: What is your favorite pie to eat at Thanksgiving?

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PREPARE. Head into family get-togethers knowing how you’ll respond in a tense situation. 🗣⁣
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Drop a gift emoji in the comments below, and I'll send you a link to the curated list. Or you can access the post via the link in my profile!


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