Mileage tracking is a process of keeping a mileage log to submit to the IRS for tax reimbursement. If you are on a business trip or on your way for charity reasons, you can keep documentation of the miles that you travel. It allows you to submit a claim for reimbursement from the IRS. Also, if you are driving a car for medical purposes, you can track the mileage and have money deducted from your taxable income. This article looks at reasons you should consider mileage tracking for taxes.
1. To save money
Business taxes are going up each day. They eat into the business profit leaving entrepreneurs with little money to reinvest. Mileage tracking provides the amount to be deducted from the business income before it is taxed. All you need to do is to TripLog Mileage and submit the logs to the IRS. It may be troublesome to keep the records, but if you are consistent, it results in some saving for the business. For example in 2018, the business mileage was equivalent to 53.5 cents. So any businessperson who drove 20, 000 miles that year enjoyed a tax deduction of $10,700.
2. Enables small businesses to raise money to reinvest
Small and medium-size businesses combine working hard and smart. One of the ways they work smart is to maximize tax deductions. They do this by tracking mileage and claiming for a deduction from the IRS. Most of them reinvest the money they save into the business. Thus, tracking mileage can result in significant savings and help the business increase its capital.
3. To lower amount of taxable income
IRS is aware that when you use your car for work assignments, you incur costs. These costs can drive people out of business if they are not controlled. So IRS offers mileage deductions to help to lower the amount of money businesses pay as taxes. When mileage tracking is done consistently, it reduces the costs of operation. Businesses that have other claims can save more money if they add the mileage deductions to the list. Trips to meeting clients, hopping between offices and picking supplies could be costly. But if you can track the mileage consistently, you end up saving a lot of money for your business.
4. Helps to track employees
By insisting on tracking mileage, it helps employers monitor employees’ movements. Thus, they can control their spending when out of the office. For instance, when the employer mandates the drivers to track the mileage, it becomes difficult for employees to use the car on activities that are not related to their work.
From this discussion, it is clear that mileage tracking is critical exercise. It lowers the taxable income and results in savings. Remember that it is not possible for business owners to deduct commute. But when the track the mileage, it helps them to recover some of the money they spend on business related trips. However, it is the responsibility of the business to ensure that the mileage is consistently tracked for accurate calculations.