Have you ever looked between the couch cushions for some spare change? If so, you’re in luck!
Citing the high price of gas, the IRS announced an increase in the standard business mileage rate for the final six months of 2011. The rate has increased to 55.5 cents a mile—up from 51 cents—for all business miles driven from July 1 through December 21, 2011. It's like finding three cents between couch cushions for every business mile you drive. That is a lot of couch cushions.
Companies are making every effort to increase their bottom line. One way they can be more resourceful is to track business mileage and deduct it from taxes. But as a businesswoman, you’re busy. So busy, in fact, that you may not consider the amount of money you lose by simply driving to meet a client or going to the office supply store.
It’s easy to brush off logging your mileage—after all, you’re just trying to get from point A to point B without spilling your morning cup of coffee! But when you forget to track your business mileage, you miss out on some significant savings.
Trips That Count as Business
The commute from home to work and vice versa does not count toward business mileage, but you can begin counting any business trips you take once you step out of your office. These common situations likely will apply toward business mileage:
- If you work from a home office and drive to meet a client for business purposes.
- When you drive to a bank to make business transactions.
- When you drive to pick up mail from your P.O. Box or the UPS Store.
- When you drive to the post office for business reasons.
- When you drive to an office supply store to make purchases for your business.
- When you take stops during a longer business trip, such as for food or bathroom breaks (within reason, obviously).
Any driving you do for work should count for business mileage. Nevertheless, you ought to speak with your accountant to determine how your work circumstances apply. Remember that you can’t deduct car maintenance or gas expenses; however, you may be able to deduct registration fees, interest on your vehicle loan, tolls and parking fees.
Keep a Mileage Log
Maintaining an accurate travel log is essential for deducting business mileage. Although it may seem obvious to keep precise travel records, it can be challenging and tedious to keep track of every trip. That’s why many businesspeople are equipping their cars with gadgets to handle the grunt work of mileage tracking. Devices, such as CarCheckup, plug into a vehicle’s diagnostic port (required on all vehicles made after 1996) and record information from the vehicle’s computer.
What You Can Save
Say the average business will drive 10,000 more miles the remainder of the year. When that number is multiplied by the new 2011 business mileage rate of 55.5 cents per mile, the savings add to more than $5,550 per year. You could take a vacation with that or max out your IRA account and then some!
Professionals can save thousands of dollars each year by accurately deducting business mileage from their taxes. What are you waiting for? Start tracking and save some moolah!