Quick Bookkeeping Tip: The Mileage Deduction
If you run your own company and use your personal vehicle for business trips and errands, remember to track these miles in order to take this deduction when you prepare your tax returns. Business mileage is one tax deduction you can’t afford to miss!
You can take the per-mile deduction or keep records of all expenses regarding your vehicle and compute the percentage that was business use. Either way, you will need to keep track of the miles used in your business.
For 2007, the per-mile deduction allowed by the Internal Revenue Service is 48 ½ cents per mile. Travel 100 miles that you neglect to record and this is almost $50 in a deduction that would have reduced your taxable income. Even little trips add up, so be sure to record every mile you travel.
Don’t forget the weekly errands you do for your business- that trip to the bank, the office supply store, a vendor’s warehouse to pick up inventory as well as the trip to a client’s site for your consulting business- are all valid business trips you should be recording. All miles to and from your place of business, even if that place is your house, are deductible.
While it may seem like a lot of work to maintain a record of your mileage, consider that it only takes a few seconds each trip to do so. Purchase a mileage log book at any office supply store, or you can use a small, spiral-bound notebook that you keep in your console or glove box. I’ve even papered my dashboard with sticky notes until I decided it was easier to use a log book.
I’ve used a log book or tracked my miles on a spreadsheet, but now I simply enter it in the accounting software I use for my business. At year-end, I print out the report and keep it with the other information I need to prepare my tax returns.
I always record the date, beginning and ending odometer readings, and the purpose of the trip. To save time, I use abbreviations such as PO (for post office) or BK (for bank). Business dinners, networking events and even sales calls to prospective clients are all business-related trips that you should be tracking.
If you prefer to calculate your expenses using the percentage method, you will need to keep all receipts for gas, maintenance, vehicle registration, etc. You will still need to know the number of miles traveled during the year and how much of this was business versus personal miles. Multiply that percentage by the total of your actual expenses and you have the dollar amount you can deduct- almost any tax preparation software you may use will compute this for you, but you will need to enter this information.
Personally, I use the per-mile method so I don’t have to keep all of these receipts, and I’ve found that I still have quite a deduction each year by using this method. It may sound like a lot of work, but you will be amazed at the dollar amount that accumulates during the year, and this can help reduce your tax bill on April 15th.
You can take the per-mile deduction or keep records of all expenses regarding your vehicle and compute the percentage that was business use. Either way, you will need to keep track of the miles used in your business.
For 2007, the per-mile deduction allowed by the Internal Revenue Service is 48 ½ cents per mile. Travel 100 miles that you neglect to record and this is almost $50 in a deduction that would have reduced your taxable income. Even little trips add up, so be sure to record every mile you travel.
Don’t forget the weekly errands you do for your business- that trip to the bank, the office supply store, a vendor’s warehouse to pick up inventory as well as the trip to a client’s site for your consulting business- are all valid business trips you should be recording. All miles to and from your place of business, even if that place is your house, are deductible.
While it may seem like a lot of work to maintain a record of your mileage, consider that it only takes a few seconds each trip to do so. Purchase a mileage log book at any office supply store, or you can use a small, spiral-bound notebook that you keep in your console or glove box. I’ve even papered my dashboard with sticky notes until I decided it was easier to use a log book.
I’ve used a log book or tracked my miles on a spreadsheet, but now I simply enter it in the accounting software I use for my business. At year-end, I print out the report and keep it with the other information I need to prepare my tax returns.
I always record the date, beginning and ending odometer readings, and the purpose of the trip. To save time, I use abbreviations such as PO (for post office) or BK (for bank). Business dinners, networking events and even sales calls to prospective clients are all business-related trips that you should be tracking.
If you prefer to calculate your expenses using the percentage method, you will need to keep all receipts for gas, maintenance, vehicle registration, etc. You will still need to know the number of miles traveled during the year and how much of this was business versus personal miles. Multiply that percentage by the total of your actual expenses and you have the dollar amount you can deduct- almost any tax preparation software you may use will compute this for you, but you will need to enter this information.
Personally, I use the per-mile method so I don’t have to keep all of these receipts, and I’ve found that I still have quite a deduction each year by using this method. It may sound like a lot of work, but you will be amazed at the dollar amount that accumulates during the year, and this can help reduce your tax bill on April 15th.
If you run your own company and use your personal vehicle for business trips and errands, remember to track these miles in order to take this deduction when you prepare your tax returns. Business mileage is one tax deduction you can’t afford to miss!
You can take the per-mile deduction or keep records of all expenses regarding your vehicle and compute the percentage that was business use. Either way, you will need to keep track of the miles used in your business.
For 2007, the per-mile deduction allowed by the Internal Revenue Service is 48 ½ cents per mile. Travel 100 miles that you neglect to record and this is almost $50 in a deduction that would have reduced your taxable income. Even little trips add up, so be sure to record every mile you travel.
Don’t forget the weekly errands you do for your business- that trip to the bank, the office supply store, a vendor’s warehouse to pick up inventory as well as the trip to a client’s site for your consulting business- are all valid business trips you should be recording. All miles to and from your place of business, even if that place is your house, are deductible.
While it may seem like a lot of work to maintain a record of your mileage, consider that it only takes a few seconds each trip to do so. Purchase a mileage log book at any office supply store, or you can use a small, spiral-bound notebook that you keep in your console or glove box. I’ve even papered my dashboard with sticky notes until I decided it was easier to use a log book.
I’ve used a log book or tracked my miles on a spreadsheet, but now I simply enter it in the accounting software I use for my business. At year-end, I print out the report and keep it with the other information I need to prepare my tax returns.
I always record the date, beginning and ending odometer readings, and the purpose of the trip. To save time, I use abbreviations such as PO (for post office) or BK (for bank). Business dinners, networking events and even sales calls to prospective clients are all business-related trips that you should be tracking.
If you prefer to calculate your expenses using the percentage method, you will need to keep all receipts for gas, maintenance, vehicle registration, etc. You will still need to know the number of miles traveled during the year and how much of this was business versus personal miles. Multiply that percentage by the total of your actual expenses and you have the dollar amount you can deduct- almost any tax preparation software you may use will compute this for you, but you will need to enter this information.
Personally, I use the per-mile method so I don’t have to keep all of these receipts, and I’ve found that I still have quite a deduction each year by using this method. It may sound like a lot of work, but you will be amazed at the dollar amount that accumulates during the year, and this can help reduce your tax bill on April 15th.
You can take the per-mile deduction or keep records of all expenses regarding your vehicle and compute the percentage that was business use. Either way, you will need to keep track of the miles used in your business.
For 2007, the per-mile deduction allowed by the Internal Revenue Service is 48 ½ cents per mile. Travel 100 miles that you neglect to record and this is almost $50 in a deduction that would have reduced your taxable income. Even little trips add up, so be sure to record every mile you travel.
Don’t forget the weekly errands you do for your business- that trip to the bank, the office supply store, a vendor’s warehouse to pick up inventory as well as the trip to a client’s site for your consulting business- are all valid business trips you should be recording. All miles to and from your place of business, even if that place is your house, are deductible.
While it may seem like a lot of work to maintain a record of your mileage, consider that it only takes a few seconds each trip to do so. Purchase a mileage log book at any office supply store, or you can use a small, spiral-bound notebook that you keep in your console or glove box. I’ve even papered my dashboard with sticky notes until I decided it was easier to use a log book.
I’ve used a log book or tracked my miles on a spreadsheet, but now I simply enter it in the accounting software I use for my business. At year-end, I print out the report and keep it with the other information I need to prepare my tax returns.
I always record the date, beginning and ending odometer readings, and the purpose of the trip. To save time, I use abbreviations such as PO (for post office) or BK (for bank). Business dinners, networking events and even sales calls to prospective clients are all business-related trips that you should be tracking.
If you prefer to calculate your expenses using the percentage method, you will need to keep all receipts for gas, maintenance, vehicle registration, etc. You will still need to know the number of miles traveled during the year and how much of this was business versus personal miles. Multiply that percentage by the total of your actual expenses and you have the dollar amount you can deduct- almost any tax preparation software you may use will compute this for you, but you will need to enter this information.
Personally, I use the per-mile method so I don’t have to keep all of these receipts, and I’ve found that I still have quite a deduction each year by using this method. It may sound like a lot of work, but you will be amazed at the dollar amount that accumulates during the year, and this can help reduce your tax bill on April 15th.
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