When determining your business’s annual vehicle expenses, you generally have the option of using actual expenses incurred or the Federal Mileage Rate.
Who Uses the Federal Mileage Rate
Using the Federal Mileage Rate primarily involves keeping track of miles driven in the course of business. This method makes it a little easier to expense vehicle costs as opposed to keeping track of individual receipts. It is also a good method to use when creating an accountable plan where you are reimbursing employee auto expenses.
But, as you’ll see in the chart below, there is also a Federal Mileage Rate for Medical/Moving and Charitable miles driven. The rates for Medical and Charitable miles are, as one would expect, used for individual Medical and Charitable deductions.
However, Moving miles are only deductible for members of the Armed Forces on active duty who are moving due to military orders requiring a permanent change of station.
The calculation is simple…
Multiply business miles by the appropriate rate.
The problem is actually keeping track of those business miles!
Keeping Track of Miles
Keeping track of business miles is real pain… Having a mileage log in your vehicle and REMEMBERING to write down business miles.
Fortunately, there is technology that can make keeping track of business mileage relatively pain free. I found this product looking through the QuickBooks Online apps webpage:
Mileage, Fleet and Vehicle Expense Tracking – TripLog
This app costs $60 a year. While I havn’t used it myself, it appears to be an efficient way to keep track of business miles. The $60 price tag may seem steep for some, but if you spend a lot of time working out of your car, salespeople for example, this app seems like a no-brainer purchase!