The business mileage rate for tax year 2021 is fixed at 21 pence per mile and remains the same in tax year 2022. The amount of business miles that you can deduct when filing your personal taxes depends on the kind of work you do, as well as whether you meet the IRS’s distance test. There are two ways to record your business mileage: keep a logbook or use a car app. Both options have pros and cons. Read our article to learn more and see which one is better suited to your situation.
Record business mileage in a logbook
A simple way to record business miles is to keep a logbook. Every time you drive your car for business, be it a few miles or a long-distance drive, record it in your logbook. There are different logbook formats out there – from printed ones to digital versions. Make sure to choose a format that works for you and your business. Also, keep in mind that the IRS only accepts handwritten logbooks. There are three things you have to record for each business trip in your logbook. First, the date of the trip. Second, the starting and ending odometer readings. Third, the miles driven for business. It may sound like a lot of work, but recording your business mileage in a logbook over the course of a year has some major benefits. You’ll have a written record of all your business trips and miles – no need to try to remember all those miles you drove for work.
Record business mileage using a car app
Another way to record business mileage is to use an app. There are many apps out there that allow you to track your business miles, including the distance, date, time and purpose of the trip. Once you have set up the app and started tracking your miles, you don’t have to do anything. All the information you need to record will be automatically logged in your app. In this case, you will have to create an account and input some basic information about your business, such as the name and address. You’ll also have to select the type of business you are in. Once you have set the information up, you can start tracking your miles. Some apps require you to input the beginning and ending odometer readings. Others let you snap a picture of your car’s dashboard to record your mileage. The good thing about using an app to record business mileage is that you don’t have to remember to write anything down. It’s all logged in your app for you.
IRS requirements for claiming business miles
The first thing you should know when claiming tax benefits from your business miles is that the IRS imposes strict rules on their deduction. According to the IRS, you can deduct business miles if you drive your own car (not a company car) for work, if you’re not reimbursed for it, and the distance between your home and work is less than your total business miles. In other words, if your home-to-work and work-to-home mileage totals more than your business miles, you can’t deduct the excess miles. Keep in mind that claiming business miles is optional. You don’t have to do it. But if you do, you should follow the IRS rules and keep good records.
Advantages of keeping a car logbook
There are numerous advantages to keeping a logbook when claiming business mileage. For example, you can see how much you drive for work and what distances you travel. You can see how often you drive for business, too. You can also see how much you spend on gas for business trips. Another advantage of keeping a logbook is that you can use it to calculate your tax deductions. You’ll have all the information you need to calculate your tax deductions in your logbook. Some logbooks even have tax tables included. One more advantage of keeping a logbook is that you can refer to it any time you need to prove to an auditor that you drove a certain distance for work.
Disadvantages of keeping a logbook
The main disadvantage of keeping a logbook is that it requires a lot of effort. You have to be diligent and record your miles every single time you drive your car for work. You also have to keep your logbook in good condition and keep it for at least three years. If you are ever audited by the IRS and the auditor finds that you have been keeping poor records, you may have to pay a fee.
Advantages of using an app to record business miles
The main advantage of using an app to record business miles is that you don’t have to remember to write down every single mile you drive for work. You can rely on your app to do that for you. Another advantage is that you can track your business miles over time and see how they’re trending. If your business miles increase or decrease in a certain period, you’ll see that reflected in your app. You can also use your app to keep track of your CO2 emissions and see how your business miles affect the environment. Using an app also allows you to see your data in one place. You don’t have to keep track of your miles in a logbook and your car’s odometer readings. All of your data is right there in your app.
Disadvantage of using an app to record business miles
The main disadvantage of using an app to record business miles is that you have to remember to start the app when you start driving for work. If you don’t, your app won’t record your miles. If you’re driving a lot each day, you may find it hard to remember to open your app each time you start driving for work.
Summing up
When it comes to claiming tax benefits from your business miles, the best way to do it is to keep a car logbook. It’s more accurate and reliable than using an app. However, an app can be a more convenient option if you’re the type of person who forgets to write things down.