One of the biggest tax deductions for an independent contractor, small business owner, salesman, Lyft/Uber driver or freelancer is vehicle mileage. All business mileage is deductible, and for 2019, the rate is $0.58 per mile. Driving just 5,000 business miles in 2019 means a deduction of $2,900!
To claim the deduction, the IRS requires a log of your trips. While you can use a notebook and manually keep track of the date, mileage, and reason for the trip, even missing a single trip means losing money.
Today, there are several mileage apps available that will automatically track your mileage, and create an IRS accepted mileage log. All you need to do is have your cell phone with you as you drive, review your trips, and the app does the rest!
Reasons to use a mileage tracking app:
- Ease of mind – you don’t have to remember each trip. The mileage tracking app will record each trip you take. Every day (or week), open the app, mark which ones were business and which ones were personal. That’s it!
- Removes the guesswork – when you review your trips, you can be sure you are accurately marking your business miles, and collecting those valuable deductible miles.
- Increase productivity – stop keeping a notebook to track your miles (or worse yet, recording mileage on the back of a napkin). It’s all stored in your app, ready for you to review when it is convenient for you.
There are a number of mileage tracking apps on the market, but the one recommended by Hampton Roads Accounting is MileIQ.
If you do a very limited (less than 40) trips per month, MileIQ has a free version you can use.
For everyone else, the best offer is the Annual Plan, which includes unlimited drives.
Using this link, you can get 20% off your MileIQ Annual Plan:
If you don’t already have a mileage tracking app, get MileIQ today to maximize your 2020 mileage deduction!
Just a side note for anyone who might think that using a mileage tracking app is not a good investment - a recent client signed up for MileIQ during his last visit to my office. The miles recorded just for the trip to my office paid for his entire annual plan!