Many of us drive for business purposes: visit clients, pick up passengers, make deliveries etc. Fortunately, all those business miles are entitled to tax deduction, under IRS. But gone are the days when tracking miles meant pen, paper and patience. A mileage tracker app now automatically logs every mile you drive – helping you save loads of money every year.
Here’s how to go about it:
1. EDUCATE YOURSELF
There are actually tax deduction schemes in place to help us retain more of what we earn. The hard fact is that, few know about them.
That effectively means that as much as up to 30% of the earnings of independent drivers will end up in government accounts at tax time. That’s a lot of money to part with – especially, that being an absolutely legal, preventable situation!
With a little bit of education, you can substantially reduce or eliminate what you owe. Learn about record keeping and filing taxes. The IRS’s official website is a good place to begin with. Sign up on discussion forums for the answers to your specific questions.
2. KEEP A RECORD OF YOUR EXPENSES
Take a look at this list: Car payments, fuel costs, car washes, interest on the auto loan, license, title, registration, maintenance, insurance, wireless plan. Sounds like ‘expenses’? They are, in fact, ‘deductible expenses’. For an independent driver, these costs can snowball to offset any potential tax owed. However, keeping the records isn’t at all a problem – if you have an expense tracker app installed in your phone. These apps are customizable and allow you to categorize your expenses as ‘business’ or personal. Your job reduces to just getting into the habit of entering the expenses!
3. TRACK YOUR MILEAGE
Most independent workers, when filing taxes, use the standard mileage deduction ($0.53 per mile in 2017). However, the mileage reimbursement rate varies for ‘expenses’ such as ‘miles driven for charity work’, or ‘miles driven for medical purpose’.
This is where an app for tracking mileage, such as MileGo comes really handy. It calculates the precise deductible mileage and keeps an online record of all of your trips – that foolproofs you for tax time!