One Very Important Deduction You Could be Missing on Your Taxes

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.

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!

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.

• 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!

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 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!

MileIQ 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.

Last Updated on February 8th, 2017