If you have the type of gig where driving is a part of the daily drill, it is clearly going to have tax implications for you. You likely already use a program or an app to track the miles…something like MileIQ, TripLog, or TrackMyDrive.
But being a self-employed contractor who does NOT use the car as a routine part of the daily hustle, did you know that you too, are able to claim your mileage, as well as deducting other related business travel expenses?
New Tax Laws
According to Bob Chatin, a Senior Accountant at SBT Financial in Georgia, the latest tax laws have changed what an employee can do, regarding travel. “The difference starting in 2018 due to the new tax law, is that employees can no longer claim mileage on their tax returns: this was eliminated. However, self–employed, independent contractors still can.”
Chatin continued: “Beginning in 2019, the standard mileage rate for the use of a car became 58 cents per mile for business miles driven, up from 54.5 cents in 2018. You can now claim 20 cents per mile driven for medical or moving purposes, which is up from 18 cents in 2018.”
- Self-employed contractors would file with their Schedule C, everyone else would itemize more directly using the Schedule A filing.
- Itemized things can include medical care and charity work. You can currently claim 20 cents per mile for medical travel, but mileage combined with other bills can’t exceed 10% of your adjusted gross income in 2019.
- You can also claim 14 cents a mile to drive yourself to do charity work. Note that this rate is very specific to only you, being driven to charity related activities.
If looking for a deduction, you can use the IRS flat-rate, or you could keep track of every specific cost related to your car, and travel. You can maintain detailed odometer readings, travel logs, keep receipts and more. You’d track all the maintenance and related costs as well, and then figure the percentage of all of it that is considered specific to business.
So, if your total costs for everything – gas, maintenance, repairs, etc. – was $5700, and you can claim 20% as strictly business-related, you’d claim $1140 as your itemized deduction.
How To Keep Your Logbook
As mentioned above, there are now a plethora of apps and programs or websites designed specifically to track your mileage for tax and business purposes. Some of the more popular free ones currently include: MileIQ, TripLog, Hurdlr, and Everlance. There are numerous paid options as well to evaluate and consider.
Like other tax and financial professionals, Chatin suggests using one of these time-saving apps or programs to help your recordkeeping, though he states that even an Excel spreadsheet or manual logbook can work too.
“You may want to reference some of the simple, yet powerful mileage apps that are now available,” he states. “They tend to really help those who have a hard time keeping a more traditional, physical log.”
No matter which way you decide to handle your record keeping, the IRS will want to see a few specifics as the year progresses:
- Dates of travel;
- Starting and end points (cities, and specific destinations);
- Purpose of your trips;
- Vehicle’s odometer readings (start/end);
- Tolls or other related road costs.
You can see that laying out a simple spreadsheet in Excel would not take long – nor would it be hard to log this information routinely in a spiral notebook with a pen, going super old school. Using either method or one of the apps, you will be answering the needs of the IRS and documenting your mileage properly.
Remember that if you have any specific questions about what to file or how to record anything, be sure to speak with a qualified financial advisor, accountant or certified business professional.