Ah the ol’ mileage log. Get in your car, open your glove box and take out this tiny pad of paper. Write down where you’re going, how many miles it took you to get there, and what your meeting is for. Lots of fun, right?
Or better yet, look at your digital calendar at the end of the year and frantically go backwards week by week, see where you went for business, search Google Maps to see how many miles and record it on a spreadsheet.
It’s a hassle! That’s one of the reasons very few people take advantage of this amazing deduction. Too cumbersome and the minutiae of details feels pretty overwhelming.
Well, I’ve got some good news. Ever heard of the app Mile IQ? If not, I’m going to tell you about it because it’s awesome. I’ve been using it for years.
Basically, every time you drive, Mile IQ sends you a push notification to your phone. You are given the option to either swipe right for business, left for personal; simple as that.
It then goes to work for you and tracks mileage, prompting you to type in simple info on your phone.
So, why do we even need to do this?
In the year 2020, the IRS will give people who drive for business purposes 58 cents a mile.
So for every 10,000 miles you drive, you get $5800 in tax deductions. That’s HUGE!
The average person could drive between 35-50 miles per day for business, which adds up to around 10,000-20,000 miles a year. So that’s between $5,000-$11,000 tax deduction you do not want to miss out on.
Here’s the catch: You have to track those miles.
See where I’m going with this?
If you don’t track your miles, you don’t actually know how many miles you’ve driven. If the IRS challenges this and you don’t have any data to back yourself up, it’ll be easy for them to disallow that.
This is where we run into problems like penalties, tax return issues – all the not-so-fun stuff.
For a long time, people held mileage logs and journals like I mentioned above to keep track of the miles they’ve driven. I’m going to level with you, as an accountant, I can’t even keep track of those tedious details.
And to be frank, logging your miles through a physical journal is not an efficient way to keep track of things.
Instead, using a tool like Mile IQ solves a lot of problems.
We pretty much always have our phones on us, right? And for those of you who are Millennials or Gen-Z, it’s as easy as Tinder; swipe right or swipe left.
Mile IQ also logs where you go. So if the IRS does start to question you, the app will show exactly where you traveled so you can prove they were business related trips. Easy peasy.
As of now, Mile IQ offers 40 drives per month for free. So if that’s all the business driving you do, great!
Then their paid plan is only $60/year unlimited tracking. If you make $75k/year – your hourly wage is $35/hr. It’s important to begin thinking in terms of what your time is worth per hour and how saving two hours of tracking in a year, pays for the app.
You just saved yourself a headache, not to mention a significant amount of time and money. Plus, the amount of money you’ll be able to deduct from your travel (including the cost of the app itself) is worth it!