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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….
- Know the rules for each deduction.
- Keep detailed records for every trip you take.
But Here's the Problem
Even though Joseph and I have had plenty of opportunities to track mileage with all of our eligible business and personal trips, we would constantly forget to record where we went!
After a year of hit-or-miss tracking, we basically decided mileage was more of a hassle than it was actually worth. We didn't need 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 would avoid in taxes if we kept better track of everything.
Since then, I've made it my mission to find a tool that was so simple, I couldn't help but remember to use it.
This in-depth post break downs exactly:
- How the mileage deduction works
- What you can deduct and for how much
- The best way to easily keep track of everything (yes, I found the holy grail of simple mileage tracking tools!)
My goal is to make this complicated portion of the tax code an absolute no-brainer so you don't miss out on all the benefits and you can stop paying the government any more than you have to.
Sound like a plan?
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!
Note: Mileage deductions take two forms:
- Deducting the actual mileage (also called Standard Mileage)
- Deducting car expenses (like gas, insurance, and repairs)
For this post, we will just focus on the mileage portion, which I think is the simpler way to track anyway!
What Type of Driving Qualifies for a Deduction?
Here's the nitty gritty detail of what's covered, and what's not. You can visit this site for the most up-to-date mileage rates.
- Medical Expenses — Any time you drive to and from the doctor's office, hospital, or to pick up a prescription, you can deduct it. 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. With that income, you can deduct any expenses over $6,000. 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 each 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 those miles as well. However, you do have to work full-time for at least 39 weeks during the first 12 months after you move to claim it. (That's the red tape, for you!)
FOR BUSINESS OWNERS:
Those who own their own business also get to take advantage of the highest rate 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 miles 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!
- Temporary Work Locations– If you work primarily from home and choose to switch that location to a coffee shop, library or co-working space, go ahead and deduct this trip as well.
Note: 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!
The Easiest Way to Track Miles: A Simple Mileage Log!
I have experimented with every mileage-tracking tool imaginable—from cute printables to spreadsheets to logbooks! One year, I even downloaded the MileIQ app, thinking this would be the solution to my mileage-tracking woes.
But here's the problem with any mileage-tracking app:
- They need to run continuously in the background, which sucks up precious data and wears on your battery.
- If you turn tracking off when you're not driving, you'll need to turn it back on 10 minutes before your drive so it has time to track properly.
- Apps may not track properly at all. The Rideshare Guy ran a test of tracking apps and each one had different results!
- They track EVERY drive, so you have to remember to categorize the trip at each destination, including a quick errand to the grocery store.
- Almost every app requires a monthly fee to use.
Sometimes, digital isn't always better.
In fact, the year I was most successful tracking mileage, it was with a simple mileage log notebook in my glove box!
This year, I found one that is so pretty I wish I could write down every trip inside.
A Peek Inside my Plum Paper Mileage Log
Plum Paper offers customized planners and notebooks and when I saw they had a Mileage Log template, I may or may not have swooned in my office chair!
I already use the bullet journal as my planner of choice, so this notebook would be solely for Mileage Tracking and could live in our glove box.
Here's how to become an owner of this pretty notebook yourself.
Would you love a discount?Fill out this form to receive 10% off your Plum Paper purchase of $30 or more!
1. Choose whether you want a spiral (more expensive) or a bound journal and pick your favorite cover design. I really like the smaller-sized journals, myself!
2. Personalize the journal by adding a frame to the center of the cover or a banner at the bottom. Type in “Mileage” on line 1 and “Log” on line 2 and select your favorite font.
3. Under Layout, choose the inside template you would like to use. In this case, the Mileage Log. You can add extra Note Pages to the journal at an extra cost.
4. Next, choose your binding—whether you want the coil or the notebook not to be bound at all. Unbound would be good if you were planning to use a disc-bound notebook.
Ultimately, I went with a bound notebook because it was less expensive ($17.00 after shipping), but in hindsight, I like that you can fold the spiral bound notebook ($26.75 after shipping) back on itself. Perhaps a trip to Staples is in my future!
The One Thing I Don't Do
Even though there is room on the template to do so, I do not track the odometer numbers for every trip. I only do this at the beginning and end of each year.
The IRS wants to know how many miles (business, medical, non-profit, moving, and personal) you drove during the year. When you have the beginning and ending odometer numbers, all you have to do is add up your deductible miles and whatever left is personal.
That way, you can go back and record a trip later via mileage to and from the location, rather than kick yourself for not writing down the odometer numbers.
By the way, if you do forget to track your mileage (it happens to the best of us!), just glance back at your calendar to see what appointments you've had this year and use this as a reference to capture some of those untracked miles.
I also suggest you add a tiny sticky note with a reminder to track miles to your rearview mirror. That way, you'll see it immediately when you get in your car to drive.
If you haven't been tracking your mileage, you could be missing out on some BIG tax deductions at the end of the year, which will help you manage money better overall.
Recording those miles doesn't have to be a chore. You don't even need to fiddle around with a fancy app!
Just grab yourself a pretty notebook and you'll make life a whole lot easier for you and your CPA come tax time.
Do You Track Your Mileage?What tool helps you be the most successful? Let's chat in the comments!
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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.