Whether you drive your personal car frequently for business or only occasionally, you might be wondering if you should be tracking your mileage. Claiming a deduction for mileage can be a simple way to get a break on your taxes. However, the IRS is known to flag mileage deductions for audits because there are rigid restrictions on what kind of miles qualify for a deduction.
The mileage restrictions depend on your work and where that work is performed. It is important to understand the restrictions so that you don’t claim miles that don’t count.
If you believe your business miles qualify for deduction and you plan to claim them on your taxes, it is imperative that you keep documentation of all miles driven for business. An easy to keep track of your miles is by keeping a travel log or using an app such as QuickBooks Self-Employed, which we will discuss in greater detail later on in this article. But first, here’s a guide that breaks down whether you should be tracking your mileage or not:
You can track mileage if you are employed by another business that requires you to drive frequently for work. It is important to note that your commute to and from work doesn’t count. You will need to use Schedule A to itemize your mileage deductions. In order to claim the miles, you will need to track all miles driven for:
- Travel to and from the airport for business trips
- Client meetings and business meals
- Errands related to business
- Travel between offices or worksites
You can also track mileage if you are self-employed and your home is your place of business. In this case you can claim miles for all miles driven related to work, such travel to a client’s place of business or business meetings. You will need to use a Schedule C for all miles driven if you are self-employed.
Other circumstances that allow you to deduct mileage include driving for charitable or medical reasons, relocation for work that is greater than 50 miles from your current residence, and traveling to find a new job in the same field if you are unemployed.
Circumstances That Don’t Typically Qualify
You cannot deduct miles if your only business-related travel is your commute to work. You also won’t be able to deduct miles if you don’t plan to itemize using Schedule A or if you are unemployed but only seeking jobs outside of your field.
How To Track Your Miles
If you have determined that you should be tracking mileage, there are plenty of easy ways to keep track of your business miles and maximize your deductions. QuickBooks Self-Employed offers a great app that keeps track of your mileage automatically. QuickBooks also helps you by integrating your mileage tracking with your other deductions automatically. If you do plan to keep track of your mileage manually you will need to use a log that includes dates, destinations, reason for travel, starting and ending mileage, and all other travel-related costs.