Track your miles and SAVE big *Free Offer*

We have no one to rely on but ourselves to get shit done. We get from point A to point B no matter what it takes. That means our cars are our everything and the costs just seem to keep adding up.  Let me know if this sounds familiar: emergency oil changes, filling up the tank after your cousin drove your car all around town, that insane interior detailing bill from the time you spilled your vanilla latte with extra foam all over your passenger seat because you were rushing to a meeting…

Our cars provide us much-needed freedom to run our businesses but that shit ain’t cheap.

Luckily for us entrepreneur gals, we could be deducting the costs of using and maintaining cars for business. Yes, that includes:

• Gas
• Oil changes
• Car washes
• Tire Purchases
• Insurance
• Loan interest
• Lease payments
• Car depreciation

You’re probably asking what’s the catch, Chika? There’s always seems to be a catch when it comes to this tax stuff.

But there isn’t one. You just have to find out what percentage of the time you use your car for business and multiply that against your costs. That’s your deduction (in the most common cases) Pretty straight forward, right?

For example, let’s say you use your car for business purposes 50% of the time. If you drove 6,000 miles last year than you would multiple that with .5 which would mean you used 3,000 business miles. Apply the 2019 business mileage rate of 58 cents and that yields a $1,740 tax deduction.  Not too shabby!

The tax deduction calculation is pretty simple compared to keeping mileage logs.  For many of my clients, the most difficult part is figuring out business mileage because they often forget to keep track during the course of the year.

I once had a new client ask for my services because he was getting audited for questions regarding his mileage log. For some reason, it never got resolved with his previous tax preparer so I had to make sure his log was presentable, and most of all, effectively proved that he was eligible for the auto mileage deduction to the IRS agent. It takes a lot longer to work retroactively than it is to just do it right the first time.

Point being, you need to keep a mileage log to make sure you have evidence of the tax position claimed in case you get audited. The more business miles you claim, the more susceptibility you have for an audit. And if you keep a clean log, you won’t have to pay good money to have someone like me look over it after the fact.

Here’s my #ChikasTaxTip:

Don’t make it hard: Use an App:

Try the MileIQ App*. When MileIQ is installed, it works in the background and logs your complete record of tax-deductible miles. It’s a great way to help your accountant with filing your taxes and also to bail you out in case you face an audit with virtually no stress on your end. With the app in tow, a la Bumble style, you can easily swipe right for business trips or swipe left for personal rides.I love when I see clients turn in their MileIQ logs because it eliminates the guesswork in everything. Plus, If you use this link*, you’ll save 20% off the Annual Plan.

Log it yourself

Attached is my handy dandy mile log I give to my own clients. If you’re allergic to innovative makes-life-easier apps or just not a techy person, use this worksheet to keep you organized.

Whatever you do, just make sure you have it documented!

P.S. KEY DEADLINES:

March 15 – Partnership & S-Corp Tax Deadline

April 15 – Individual & C-CorpTax Deadline

P.P.S. Want more freebies like this? Make sure to join my poppin’ FB group Chika’s Tax Tips. Connect with other entrepreneurs and have your questions answered. Oh, and follow me on Instagram @chikaobihcpa. Just cause 😉

P.P.P.S I have very exciting news to announce soon.  Stay close to your inbox to be one of the first to hear about it.

*Some affiliate links are used, which means I may receive a commission should you decide to click that link and make a purchase.