Ok, normally I hate small talk, but high ass gas prices are just a shared frustration these days… Unless you are one of the motivated badasses that walks or bikes everywhere, you’ve probably been victim to those ugly prices. But a girl’s gotta get to where she needs to go so we take the hit.
Here’s some real talk about high gas prices: They are impacting your taxes.
Quick Review: Auto Mileage tax deduction
One of the many tax write-offs available to you as an entrepreneur includes the auto mileage tax deduction. If you use your car for business purposes, you can claim the business-use portion to reduce your taxes.
How do you do this successfully? You want to keep track of the miles you drive for business purposes.
This includes miles driven to and from your clients offices, to buy supplies, to go to conferences, etc. Even if a roundtrip to see your client clocks in at just 5 miles, it all adds up over the course of a year. So keep track and watch the tax savings grow.
The IRS has Great News for Us!
The IRS announced, in June, “an increase in the optional standard mileage rate for the final 6 months of 2022.”
That’s right. For July to December 2022, the mileage rate for business-related travel will be 62.5 cents per mile. This is a 4 cent increase from the beginning of the year. Increases in mileage rates during the middle of the year are rare, so this is something you should keep on your radar.
(To read the full IRS article language, visit the announcement here.)
What does this mean for you?
If you are an employee, the current tax law does not allow employees to deduct work-related mileage. But for my entrepreneurs who drive for business reasons, this benefits you so listen up!
You want to make sure you are keeping track of your business-related miles driven. You can do this by using software, a phone app or a spreadsheet. I personally recommend using a phone app, it’s brainless and reliable.
Mile-tracking apps to checkout:
If you would rather use a spreadsheet, make note of the date, starting and ending addresses, and mileage of each trip. In this case, Google Maps would help you figure out the mileage of each trip.
Gas prices add up. The IRS decided to do something nice about it and increase the mileage rate. Which means your auto-related tax deductions will be higher this year. It may not be much compared to paying $7 per gallon at the pump, but we will take it.
P.S. Are you a driven business owner ready to work with a CPA who provides proactive, done-for-you accounting and tax services on an ongoing basis? This is our specialized, high-touch service we offer to businesses grossing $250k – $5m annually. We have opened 2 spots for the month of July. If you want to ensure you grab one of those 2 spots before they’re gone, apply to work with me.
Disclaimer: This blog is for educational and conversational purposes only. Blog posts and social content from Obih Collective Inc. are not legal tax advice. Please consult a tax professional before making any tax decisions based on this information.