A mileage tracking app is the best way to keep track of your miles for tax or business purposes. You may be thinking, “Can’t I just use a pen and paper?” Yes, but the best mileage tracking app has multiple advantages. Let’s go over six ways a mileage app saves you time and money.
How A Mileage Tracking App Saves You Time and Money
A mileage tracking app like MileIQ not only can save you boatloads of money at tax time, but also puts valuable hours back in your day. That’s valuable time you can use to grow your business. Or to play with your kids. Or to do whatever it is you want to do … it’s your time.
The Best Mileage App Saves You From An IRS Nightmare
The IRS is famously skeptical when it comes to taking a mileage deduction. That’s not to say that they don’t want you to take it. It’s just that they know a lot of folks try to be overly-generous, with it.
For that reason, the IRS requires some pretty specific information to be recorded for each trip you plan to deduct. A mileage tracking app can do this automatically. If you don’t have the proper information in your mileage log, you could lose your deduction and have to pay a penalty.
So what information does the IRS require? At a minimum, you’ll need:
- Miles you drive
- Dates of each trip
- Places you drove
- Business purpose of the trip.
The IRS want to know the total miles you drive for both business, commuting and personal reasons. It’s a lot to keep track of!
Sure, you can use a paper log to do that, but eventually that gets cumbersome. Even worse, you start forgetting to record drives. A mileage app like MileIQ, automates this process. It runs in the background on your phone and records every single drive you take. Then you can easily classify them as
It runs in the background on your phone and records every single drive you take. Then you can easily classify them as business or personal—with this mile tracking app that’s as simple as swiping left or right—and have an IRS-compliant log at the end of the year.
What Is The Best Mileage Tracking Apps For Taxes?
You likely remember to log the longer and obvious drives you make, but what about the smaller drives you’re making? An automatic mileage logging app will make sure you catch every single drive and never miss the opportunity for a deduction.
Don’t believe those numbers add up? Take a look at your past logs. Did you document your drives to get gas? What about those drives to Starbucks to bring your client a coffee for a meeting? Trips to buy office supplies, the post office, hardware store, etc.
I’m willing to bet you’re forgetting to track at least some of those shorter drives that a mileage tracking app would capture—and with the 2015 mileage rate set by the IRS at 57.5 cents per mile, those drives add up fast! In fact, the average MileIQ customer logs $535 in deductible drives per month.
A Mileage Log App Backs Up Your Deduction
A lot of people say they’ll just use their odometer to track their mileage rather than using a mileage tracking app. However, as I mentioned above, the IRS doesn’t require odometer readings as part of your mileage tracking—except for at the start and end of the year.
Additionally, an odometer simply won’t capture the other IRS required information that an automatic mileage tracking app will. This forces you to manually record whether the drive was business or personal, the place, the reason and manually calculate the distance. Not only is that a pain to do for every single drive, especially if you’re in a hurry, but it takes a lot of time. This brings me to my next point …
The Best Mileage App For Business: Time = Money
I know what you’re thinking, “time is money” is such an old cliche—but sometimes things are cliche because they’re true. If you’ve previously been tracking mileage with a pen and paper or even a spreadsheet, ask yourself, “How much time every week do I spend logging my mileage?” And then ask yourself, “What is my time worth?”
Let’s face it, writing down every single trip, reason, location and date is time-consuming, and a mileage tracking app can automate that for you. How much time can you really save by using an app to track your drives? A survey of MileIQ users found that on average, users save six hours each month by not manually logging their miles—that’s 72 hours per year.
If your billable rate is $50 per hour, a mileage tracking app can be worth $3,600 in billable hours per year.
A Work Mileage Tracking App Creates a Digital Log
This ties in a bit to saving time, but it’s important enough to get its own heading. We hear over and over that one of the biggest tax-time mileage pains is converting a paper mileage diary into a format useful for tax preparation. Often, this means manually entering every single trip from your hand written log into a spreadsheet. At the very least, it means going page by page with a calculator adding up all of the business miles—no small chore when you’re logging hundreds, if not thousands of miles each month!
By using a mileage tracking app, you’ll have an accountant and accounting software-ready spreadsheet or PDF file at the press of a button.
One Final Benefit: You Can’t Lose A Mileage Tracking App
Pretty much the worst thing that could happen is for some reason, you lose your mileage log and have to try to recreate it. Whether you’re keeping a handwritten log or trying to track your miles in a spreadsheet on your computer, your manual log is subject to loss.
By using the best mileage tracking app, all of your drives are backed up to the cloud. Even if you lose your phone you won’t lose your tracked miles. And, in the case of MileIQ, you can also access all of your details in our dashboard, which is chock full of great features.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.