Smartphone app can lead to big savings on your tax return!
The IRS has announced the 2016 optional standard mileage rate for calculating the deductible costs of operating an automobile for business purposes. Starting January 1, 2016, the standard mileage rate for the business use of a car, van, pickup, or panel truck is 54 cents per mile. This is down from 57.5 cents in 2015. The IRS also announced the 2016 standard mileage rate for vehicles driven for medical or moving purposes (19 cents per mile) and for vehicles driven for charitable purposes (14 cents per mile).
Tracking mileage is important if you want to use your business miles as a deduction on your tax return.
If you are reimbursed a lower amount from an employer, you might able to use form 2106 to deduct the additional amount up to the IRS rate. (For example, if you’re reimbursed .33 cents a mile, your deduction on your tax return would be 0.21 cents a mile). If you are working for an employer, the deduction is subject to certain limitations.
I suggest using an app with GPS to track your mileage.
I use MileIQ and LOVE it! Since starting to use an app to track my miles, I have saved hundreds in potential mileage deductions! ( When signing up with MileIQ, use this promo code to get you a discount on unlimited trips to get you started: SZIS716A ). There are other apps, but this one I have tried and have found it works very well for myself! The most important thing is TRACK THOSE MILES!
Otherwise, If you don’t like technology, keep a notebook in your vehicle and write down every business trip. You will need to track: starting odometer, ending, destination and purpose. Tracking personal and business mileage is essential when deducting mileage on your tax return. Make sure to keep track of how many total miles were driven throughout the year. Depending on which tax bracket you are in, this could be HUGE savings for you on your tax return!