What Qualifies as a Business Mile Expense?
There are countless ways to deduct business expenses to lower your taxable income and avoid having to pay more in taxes. As a financial support institution, we are passionate about educating our clients about all of their tax deduction opportunities. Are you aware that there are ways you could be saving more money in taxes? It’s true!
One such tax deduction is related to miles driven in a vehicle related to the business. Some examples of eligible miles include:
- Miles driven to off-site meetings
- Miles driven to appointments to obtain business licenses or permits
- Miles driven to stores to purchase supplies or equipment
- Miles driven to deliver or pick up inventory
- Miles driven to attend events, classes, or courses related to your business
- Miles driven to the airport to travel for business purposes
- And countless more!
As you can see, there are several instances where you can use miles driven to deduct this expense from your taxable income.
Tracking Your Business Miles With Ease
Now that you understand what is considered a business mile and how it can be eligible for a tax deduction, let’s discuss how to properly track your business miles to maximize your tax benefit.
We recommend using a simple spreadsheet for organization. We created one that makes tracking your business miles a breeze. Check out our MILEAGE TRACKER, which costs you only $7 and pays for itself in your upcoming deduction savings!
If you’d rather utilize your own tracking system, we recommend the following steps for accuracy and convenience when tracking your business mileage:
Step 1
At the beginning of the year on January 1st, notate your car’s mileage.
Step 2
Whenever you’re using your personal car for business purposes, note:
- the date
- where you were going
- what the purpose was
- the number of miles round trip
- Example: 4/23/24 – Target – Shop for Office Supplies – 17.4 miles
Do this every time you use your car for business purposes.
Step 3
At the end of the year, on December 31st, calculate the total mileage tracked throughout the year.
Step 4
Give this information to your CPA for tax filing.
What Dollar Value Can I Deduct for my Business Miles?
Each year, the IRS sets a rate for business miles. In 2024, you can right off .67 cents per mile. So that trip to Target allows you to write off $11.66!
It’s important to discuss the specifics of this type of deduction with your tax accountant. They may have specific advice on how to use or not use certain trips to help with your overall deduction amount.
What About Other Car Expenses?
You may be wondering about other car-related expenses, such as gas, car insurance, and repairs / maintenance, and if they are deductible. The answer is that yes, they are, but not if you’re choosing to use the standard method of business miles as your deduction.
The IRS allows you to deduct your car-related expenses either by mileage OR by actual expense. In many instances, the mileage deduction amount is higher and can save you more in taxes. This is another good conversation to have with your CPA.
Your Tax-Savings Opportunity: Your Car
While your car and business-related driving requirements can come in handy as a tax deduction, it’s important to consider your overall tax strategy early in the year.
Many businesses want to lower their taxable income as much as possible. However, there will always be things that don’t qualify as a deduction or have changed since your last filing. Keeping in strong communication with your CPA throughout the year is most recommended. They can guide you to adjusting your income by making necessary expenses to support your business and lower your tax liability.
Regardless of how you choose to track your business miles, we hope you lean on the resources and education of the trusted individuals around you to help you make the best business decision. We would be proud to help you at any point along the way!
Connect with us to further understand your tax savings opportunities.
And learn more from these helpful business posts:
- Should I Hire a Bookkeeper or an Accountant?
- Finance Basics Every Business Owner Should Know
- Sales Tax 101: An Introduction
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
