If you drive your car for business purposes, claiming your mileage can be an easy way to get a tax break. But the IRS considers mileage deductions easy targets for audits because there are strict restrictions on what type of mileage qualifies for a deduction.
These restrictions depend on what type of work you do and where you do it; and many people mistakenly claim deductions that don’t qualify.
If you think you qualify for deductions and you intend to claim them come tax time, you must keep good documentation. Documenting your miles means you keep a travel log. To save you time, here’s a guide for who needs to track their business mileage and who doesn’t, as well as some tips on the easiest way to track mileage.
You Should Track Your Mileage If
If you work for an employer and intend to claim deductions from business travel (beyond just commuting to and from work), you will need to itemize your deductions using Schedule A. To claim these deductions, track your mileage for:
- Travel between offices at two different work locations
- Travel from home to a temporary job site outside your permanent work location where you expect to work less than one year
- Travel for business-related errands, such as depositing bank slips or buying supplies
- Travel to meet clients
- Travel for business meals or entertainment while meeting clients
- Travel to the airport for business trips
If you’re self-employed, you should track any mileage that falls into the above categories, but you will claim it as an expense on Schedule C rather than itemizing it on Schedule A.
- If you work from home, your home qualifies as your principal place of business, so you don’t commute. You can therefore claim deductions for miles traveled to other business locations, such as a second office or a client’s office.
- If you’re unemployed and looking for work, you can deduct miles traveling to find a new job in your current occupational field, but not miles traveled while looking for a job in a new industry.
- If you drive for medical or charitable reasons, you may also qualify for a smaller deduction.
Track your mileage no matter what or how you plan to deduct. If you use standard mileage to calculate your deductions, you use a fixed rate set by the IRS (54.5 cents a mile in 2018), and you cannot claim vehicle-related expenses such as registration, maintenance and repairs, which are already factored in. If you choose actual expenses, you can include these other vehicle-related expenses, but your mileage isn’t factored in.
Save time tracking by using an app with automated mileage tracking features. There are many competing mileage tracking apps, but QuickBooks Self-Employed has the advantage of automatically integrating your mileage tracking with your other deductions, saving you time and hassle separating your business and personal expenses.
You May Not Need to Track Your Mileage If
- You work for an employer and your only business-related travel is commuting to work
- You work for an employer and you don’t intend to itemize your deductions using Schedule A
- You work from home and don’t travel for business purposes
- You’re unemployed and not traveling to seek jobs in your current occupational field
If you’re tracking your miles manually, your log should include dates of trips, starting points, destinations, reasons for travel, starting and ending mileage, and travel-related costs such as parking and tolls for business trips (however, you cannot deduct fees for parking at your normal workplace). If you’re using QuickBooks Self-Employed, the app automates your log-keeping for you.