If you use your personal car or other vehicle for business purposes, you may expense the cost and mileage as an IRS business deduction and claim more and therefore save more based on your deductions. You will probably need to pay less Federal income tax, State tax, Social Security and Medicare taxes.
TripTagger on your iOS or Android smartphone records all motorized drives. Each drive you do is recorded and logged as a trip card which shows you detailed information such as the date, time, starting location, destination, the route that was driven, and the automatically calculated mileage. You can easily categorize your drives as a “Business” or “Personal” drive with a single swipe. With a few simple taps you can tag additional information to further identify the vehicle, purpose, or refund of the trip. Conveniently look up your total trip mileage and expense deductions whenever you would like . If the IRS ever asks you to provide evidence of your mileage claims you can download a detailed vehicle mileage log as documentation to support your mileage reporting for that year.
At the end of the year, you can conveniently look up your total expense deductions. Oh, and if the IRS asks for evidence you can download a detailed report showing them the contemporaneous record and evidence of your calculations.
You can use two methods: the standard mileage deduction or actual expenses.
The IRS standard mileage rate is the easiest and simplest method. Simply multiply your total miles by the 2019 business mileage rate of $0.58 cents per mile and deduct that amount as an expense from your income. Though the actual expense method might allow you to deduct an even larger amount, especially if the operational costs of the vehicle you drive are above average, there is a downside: you must maintain the mandatory vehicle mileage log book or record (which TripTagger provides) you have to keep a record of all incurred costs (gas, oil, repairs, tires, insurance, etc). Once you have summed up all costs you are left with the total deductible business expenses which you can deduct from your income.
Beginning on Jan. 1, 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
- 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
- 14 cents per mile driven in service of charitable organizations.
- If you use the standard mileage rate, all costs are considered factored into the IRS mileage reimbursement rate and you cannot deduct actual car expenses for that year. The only exceptions are parking fees and tolls on business trips. Other fees such as fines, collaterals, and parking fees at your workplace are not considered deductible business expenses.
- If it’s your first year in business, you must use the standard mileage rate.
- If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. You must make the choice to use the standard mileage rate by the due date (including extensions) of your return.
- The standard mileage rate may not be the correct option for you as certain restrictions apply. For example, there are restrictions if you claim five or more tax deductible vehicles simultaneously. For more information, please refer to the IRS publication.
You need to keep accurate contemporaneous mileage records to prove your deductions for business driving. It’s important that you record every drive with the time and date, the total distance of the drive, the destination, and the business purpose. You can track mileage by maintaining your own auto mileage log book with a pen and paper, you can use a vehicle mileage log template, or just let TripTagger work in the background for you. The IRS doesn’t require you to add odometer readings for every drive. However, it’s not enough to simply estimate business mileage or create a log book from memory once tax deadlines approach.
The more miles you claim, especially if your estimations don’t seem realistic, the more likely your deduction is to raise an IRS audit red flag. Not to worry, TripTagger records your drives automatically and creates real-time and accurate mileage reports to back up your claims. If you ever happen to get audited, you can be confident of your mileage record reports.
Each drive to a business location (a customer visit, drive to a business meeting, business related errands and supplies, drives between offices, etc).
Important: Daily commutes are NOT considered business mileage. The IRS qualifies the drives from or to your home as a personal expense.
As sole proprietor (Uber or Lyft driver), you report your income and business expenses using IRS Schedule C.
In the Car and Truck Expenses field, you simply enter the amount which you calculated for your deductible business expenses. You are then required to provide additional information like the date you placed your car in service for your business, total miles you drove for business, total miles for commuting, total miles you drove that was not for business or commuting, whether your car was available for personal use, and whether you or your spouse have another vehicle available for personal use.
Then you are asked if you have evidence to support your deduction and whether it is written. In order to claim the deduction, you must answer “Yes” to both questions. However, you don’t have to file any evidence with your tax return. If you happen to be audited, you must then provide such evidence to the IRS. Good thing you have TripTagger—it provides a written report to use as evidence.
You need to know the total number of miles you drove during the year for business, commuting, and other personal driving. TripTagger provides complete, accurate, IRS-compliant documentation to back up mileage deductions.
Use for informational purposes only, get all tax facts directly from the IRS.