Get The Full Value of Your 2014 Mileage Deduction
Use This Guide to Help Get Your Biggest, Most Accurate, IRS-Compliant Mileage Deduction or Reimbursement
Staying on track to get the full value of your 2014 mileage deduction may seem tedious, especially if you have’t been documenting your miles throughout the year, but with some careful work, you may earn a hefty financial return and you’ll be 100% ready in case you get audited. The first step on the right track to an accurate mileage deduction is understanding key definitions, conditions, exceptions, and submission protocols. In this post we will review all of these topics and provide tips and tricks for you to prepare for your 2014 mileage deduction.
2014 Standard Mileage Rate Method vs. Actual Expense Method
Actual cost method
With this method you add up your actual car expenses from the fiscal year to determine how much you spent on deductible costs, which include depreciation, licenses, lease payments, registration fees, gas, insurance, repairs, oil, garage rent, tires, tolls, and parking fees. The actual cost method may be most useful if you only use your vehicle for business because if you use it for both business and personal use, you may deduct only the percentage of the costs that are for business use, which means you will still need to keep a detailed mileage log. (Please review IRS Topic 510 – Business Use of Car for more details.)
Standard mileage rate method
With this method you apply a standard mileage rate to the amount of miles you drove for businesses purposes during the fiscal year. The IRS determines this rate on a yearly basis by estimating the average cost of operating a vehicle for different kinds of driving. If you decide to use the standard mileage rate method, you can add parking fees and tolls to your deduction; however, you cannot include depreciation, insurance, general repair, or maintenance expenses.
To use the standard mileage rate method you must own or lease your vehicle, and to use this method for a vehicle that you own, you must choose to use it in the first year the car is available for use in your business. There are a few other less common requirements to understand before using the standard mileage rate method, but you should definitely review them all in Topic 510 – Business Use of Car.
While each method has its advantages and disadvantages, using standard mileage rates to tally your deduction saves you time and stress by taking the guesswork out of your calculations. If this is the first year that you’re deducting miles for a vehicle, and you qualify for both methods, you might consider tracking both and seeing which would get you a bigger deduction before you decide which method to use.
2014 IRS Mileage Rate
The IRS adjusts the standard mileage rates every year, based on changes in the fixed and variable costs of operating a vehicle. When you calculate your 2014 mileage deduction, you should use the rates for the tax year in which you drove, not the calendar year in which you are filing your taxes. You can review the 2014 IRS standard mileage rates here.
|Business or Clergy||Medical or Moving||Charitable|
|56 cents per mile||23.5 cents per mile||14 cents per mile|
Whether you’re using the standard mileage rate method or actual cost method for your 2014 mileage deduction, only certain types of drives can be deducted. These drive types fall into several broad categories: business, medical, moving, and charitable service.
Deductible Drive Types
- Between offices: If you are at your office or job site and you drive to a second place of business, you can claim the miles that you drive between them.
- Customer visit: If you drive to meet with your customers for business at an office or job site (and most other miscellaneous locations), your miles qualify for deduction.
- Meeting: If you’re required to visit a place of business for a meeting, your miles qualify for deduction.
- Errands/supplies: If you drive for business-related errands like trips to the bank, office supply store, or post office, your miles qualify for deduction.
- Meal/Entertain: Trips to meet with clients for meals or entertainment may qualify for deduction. More on deducting entertainment and meal expenses for business »
- Temporary site: If you go on a work assignment that you expect to last (and does in fact last) a year or less, you can typically deduct the miles that you travel from your home to your temporary work location. (Please see IRS Publication 463, Section 1 for more details.)
- Airport/Travel: The costs of business travel — visiting clients and customers — may be deductible including getting to and from the airport for those business trips that are in another state or country.
- Job seeking: If you are a job-seeker, and/or take educational classes for job-related purposes, you may deduct the miles that you drive to the appropriate locations. Please see IRS Summertime Tax Tip 2013-03, July 8, 2013 for more details.
- Odd jobs: If you drive to odd jobs like babysitting, pet care, or lawn work, you may deduct those miles.
- Clergy: If you are a member of the clergy (such as a pastor or staff member) and drive for church-related business, such as visitations or special events, you may be able to deduct those miles.
If you use your own car to commute to a volunteer position and calculate the actual car expenses, you can deduct parking fees, tolls, and cost of gas and oil, but not the cost of insurance, maintenance, registration fees, or depreciation.
- Parents: If you are a parent who drives your children to medical appointments, you qualify for mileage reimbursement.
- Nurses and caretakers: If you are a nurse or a caretaker who travels with patients in need of injections, medications, or other treatments, you may deduct the miles you drive with them.
- Institution visits: If you drive for for regular visits to see a mentally ill dependent, your miles qualify for deduction so long as these visits are recommended as a part of treatment.
- Parking tolls, fees, and transportation: If you pay for transportation to receive medical care, such as fare for a taxi, bus, train, or ambulance, you may deduct those costs. In addition you may deduct the cost of parking fees and tolls to your medical care whether you use actual expenses or the standard mileage rate. IRS Topic 502 – Medical and Dental Expenses.
Your Commute is Not Deductible
Your regular commute to and from work does NOT typically qualify as business mileage. However, the IRS states in publication 463 that “if you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.” This can be a valuable additional business deduction, but you should definitely check with your tax preparer or accountant if you think you might qualify.
There may be additional types of drives or situations that exclude you from being able to deduct your miles. Please be sure to check with your tax preparer and read through the appropriate IRS documentation.
Substantiating and Submitting Your 2014 Mileage Deduction
The IRS requires that you keep timely and accurate records of the miles you plan to deduct. So while you should always review your records at tax time to ensure the mileage deduction figures are accurate, you should also be keeping track of your mileage as often as possible. The IRS Publication 463, Section 5 states “you do not need to write down the elements of every expense on the day of the expense. If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely-kept record.”
While we highly recommend tracking your miles as they happen, if you need to log them at the end of the week, here are a few tips to make it go smoother:
- Email: Review email threads between you and your work, colleagues, or clients to confirm dates you drove and specific details of the trip.
- Calendar: Review past calendar entries for previous client meetings, errands for work, or visits to other office locations.
- Receipts: Look through paper receipts for dates you took clients out to lunch or met them away from your office.
- Bank records: Scroll through your online debit and credit records to refresh your memory of dates where you paid parking fees or tolls for non-commute-related business reasons and then tally the exact miles between the start and end points.
- Mobile device: If you use parking apps on your smartphone or tablet, look through your history to keep track of where you were and possible parking fee deductions. It may be even make sense to print out a summary or create a PDF of your statements or fees on a monthly or annual basis just to make sure you have proof.
- Toll: If you use an electronic toll transponder, check your statements to track your deductible trips and toll fees. Same as above, it may make sense to print out a summary or create a PDF of your statements or fees on a monthly or annual basis to make sure you have proof.
Staying on top of your mileage logging on a daily or weekly basis may seem tedious, but the reward is worth the price. Not only will you see a higher return on your taxes, but you will have peace of mind in case of an audit. Keep in mind if you only drove 50 miles per week for business reasons throughout the year, you could claim a $1456 mileage deduction on your 2014 tax return.
Looking Ahead: Preparing for Your 2014 Mileage Deduction
Consistently tracking your miles prepares you in case of an audit; relieves you of the headache of digging through old receipts; and also saves you time and and money. In other words, there’s no reason not to keep good mileage records in 2014. What information should you track? There are four key components:
- Time and date of the drive
- Total distance of the drive
- Destination of the drive (although we recommend recording the start and stop location for more thorough records)
- Business purpose of the drive
There are several ways to track this information physically and digitally.
Physical Mileage Log Books
You can find physical mileage log books in most office supply stores, as well as on e-commerce sites like Amazon.com. Despite differences in looks and sizes, all mileage log books prompt you to fill out the information you need to substantiate your 2014 mileage deduction. If you like keeping handwritten records or just don’t want to interact with software or an app on your mobile device, this is a great option for you. However, there are downsides to the physical mileage book, including the risk of losing months worth of records if you misplace it. There’s also the issue of portability — log books can be unwieldy, and it’s easy to forget to bring them along on your drives. And of course the biggest problem of all is that you have to remember to record all your drives as they happen, which is difficult to do when you’re driving for business.
Mileage Log Templates
Mileage log templates are pre-filled spreadsheets that remind you what information you need to record about your drives. One of the biggest advantages of the spreadsheet is that you don’t have to worry about clutter or deciphering your own handwriting. However, make sure to keep copies of the file in multiple places in case your computer crashes or you lose access to your server. Similarly, set reminders for yourself to log your miles because you obviously won’t be typing on your laptop as you drive.
Use a Mileage Tracking App
While there are several kinds of basic mileage tracking apps that can be used on a smartphone or a tablet device, they generally all aim to streamline the record-keeping process and ensure you have the appropriate information you need come tax season. If you spend your days glued to your smartphone, a mileage tracking app is for you. Of course, if you’re a technophobe or don’t have a smartphone, you might want to stick with a physical logbook or mileage log template.
MileIQ Automatic Mileage Tracking
If you have never downloaded a mileage tracking app before, check out MileIQ, an app that stands out above the alternatives by detecting your drives automatically whenever it’s with you in your vehicle when you’re driving. You get to focus entirely on your business and your clients while MileIQ tracks your business drives for you. Here are some key features to get excited about with MileIQ:
- Quick set-up — The MileIQ app is free to download, and users can set up an account in less than 30 seconds. After that, users just drive as usual and MileIQ will automatically log all their miles for them.
- Automatic drive logging — MileIQ sits in the background on a mobile device and records every drive taken without needing to be opened, activated, started, or stopped. It automatically maps the origin and destination of each drive, records the distance traveled, calculates the value of the miles, and syncs every drive detail to the cloud.
- Easy classification — Within the MileIQ mobile app, each drive can be classified as business or personal with a single swipe. Users can find more detailed classification options on the MileIQ web dashboard, where drives can be marked as moving, medical, or charity, and sub-categories for business and personal can be assigned.
- Complete cloud-based drive history — MileIQ automatically syncs every drive to the cloud so users have access to their full drive history whenever they need it (even years down the line if an audit occurs). From the web dashboard at mileiq.com, users can view stats, edit drives in bulk, run reports, and submit expenses directly to a linked FreshBooks or Concur account.
- Hassle-free compliance — After drives are automatically logged by MileIQ, users can add optional details like parking, tolls, vehicle, and notes, making it easy to capture all the information needed to comply with IRS and corporate reporting policies.
- Flexible reporting — Users can generate complete, accurate mileage expense reports in a variety of formats. FreshBooks and Concur users can push their MileIQ drive logs directly into those systems. Other report options include pre-formatted PDFs, as well as CSV exports for users who wish to perform custom calculations or copy their mileage information to another location. All reports include the supporting details necessary to comply with IRS and most corporate reporting policies.
- Targeted integrations — For users who want to connect their mileage data with the other information they use to administer their business or track their finances, MileIQ offers seamless integrations with systems like FreshBooks and Concur. Integrations with other accounting, tax, and expense management tools are in development.
- Multiple subscription options — A free version of MileIQ lets users capture 40 drives per month. Users who do more driving can purchase unlimited-drive plans for $5.99/month or $59.99/year. Group and enterprise rates are available upon request.
- Customizable settings — Users can customize certain MileIQ settings to satisfy their individual mileage-tracking needs. For instance, users can track distances in kilometers instead of miles or specify the hours when tracking is active. Additional customization options are always in development and rolled out on a regular basis.
- Automated reminders — Users who like to watch the value of their miles add up or who appreciate gentle reminders about classifying and reporting their drives can opt to receive push notifications and/or emails at their preferred level of frequency.
- Multi-platform support — The mobile MileIQ app is available on the iOS platform, optimized for iPhone and also compatible with cellular-enabled iPads. MileIQ for Android is planned for this fall, and a Windows version is in early development. The web app is optimized for modern web browsers like Chrome, Firefox, and Safari.
Whichever mileage tracking method you choose, remember to keep good, consistent records for all of your qualifying drives, no matter how short they seem. Those quick trips to post offices, banks, or client lunches really add up, and come tax time, you’ll thank yourself for keeping up with your logs!
Maximize Your 2014 Mileage Deduction With MileIQ Automatic Mileage Tracking
With the 2014 tax season coming to a close soon, and the 2015 mileage rate increased to 57.5 cents per mile, up from 56 cents per mile in 2014, upgrading the way you track your business miles can add significant value to your 2015 tax deduction or your reimbursement from your company.
MileIQ captures and logs your drives automatically while you focus on your business. Download it now for iOS or Android:
MileIQ captures and logs your drives automatically while you focus on your business.
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