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  • Writer's pictureJacob Curtis

Small Business Write-Offs : Taxes and Mileage

Updated: Dec 28, 2022

Today we will be talking about mileage and how it affects your business taxes.

When we talk about taxes and mileage, the goal is to reduce the amount of taxes you owe by making sure that you’re getting all the deductions you possibly can. It’s a little difficult to get the tax mileage deduction, so you’ve got to make sure you’re setting things up the right way.

Remember that this blog isn’t tax advice, it’s educational. We’re going to talk about how mileage deductions work but that’s not the same as professional advice. Always make sure that you talk with your qualified tax preparer, and this blog can just be part of your training, education, and experience.

Keep a Mileage Log

The best way to make sure you can claim a deduction is to keep track of your mileage. You’ve got to use a mileage log everywhere you go, otherwise, you won’t be able to use mileage as a tax deduction. It’s just one of those quirky little rules that the IRS requires us to follow, we have to keep a mileage log.

This means that if you drive somewhere, you need to write down the date, where you drove, why you drove there, and how much it cost.

If you start to wonder if it’s really that important to keep a detailed mileage log, keep in mind that you’ll really need those records to show the IRS if you ever get audited.

Remember to Reimburse

The other thing you’ve got to make sure is that you’re reimbursing both yourself and your employees for mileage. Make a mileage form for employees to fill out and turn in, and save it as a receipt. Include how many miles the trip was, where you started from and where you went, maybe even use a printout from Google Maps.

When you’re reimbursing yourself or your employees, it’s best to use the same rate the IRS does for mileage. That way when you get the deduction, it’ll already be set up at the same rate.

Make Sure the Trip Qualifies

Once you’ve got your mileage log and you’ve figured out reimbursements, you need to be sure those trips qualify for a deduction. Only certain kinds of trips are considered deductible expenses.

Commuting, for example, cannot be deducted. Going to the bank every week, or anything else that’s considered part of your regular business routine doesn’t count. But driving to get office supplies, driving to drop something off, those can be considered for mileage reimbursement. It needs to be something that’s out of the ordinary, like meeting clients for lunch or driving to a conference. It also has to be unique to your business, so make sure you understand what that means and how claiming mileage can be beneficial to you.

Claim Those Deductions

If you understand how to properly log, reimburse, and claim business mileage, it’s well worth it. Remember, the average gallon of gas is roughly $3.50in the United States in 2021, and the IRS will reimburse you for $0.56 of that. Even if you didn’t do it for 2021, consider doing it for 2022.

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