ATAX shows you options in case you haven’t been tracking your tax-deductible mileage throughout the year. You can still take advantage of the mileage deduction.
With a standard mileage rate of 58 cents per mile, it’s extremely important to accurately track your tax-deductible mileage so you can take advantage of this valuable deduction at tax time. There are a lot of effective and versatile apps (many are even free!) that make it easy to regularly track your business mileage using your cell phone, including Everlance, MileIQ, Stride Drive, and TripLog. ATAX’s tax professionals can help with any questions you have about your mileage logs or mileage-tracking apps that can help make tax-filing much easier.
But what if you haven’t tracked your mileage this year? Are you totally out of luck on getting the mileage deduction? No, not at all. In fact, the IRS allows drivers to deduct mileage even if they have incomplete mileage records. But if you’re going to submit mileage this way, be sure that your estimates can be supported by the evidence you present.
Here are ways you can legitimately fill out a mileage log after the fact:
If you rely on information from the ride-sharing company only, you can deduct these tracked miles for paid trips, but not the mileage between paid trips. While you’re not getting all your qualifying mileage deducted, you’ll still be able to save a good amount of money on your taxes, which is much better than nothing at all.
2. Use Proof of Other Business Mileage to Estimate Missing Mileage
First of all, you’re not trying to recreate a mileage log you should have kept all along. It’s too late for that, and the last thing you want to do is make up mileage numbers. But you can use tracked mileage to help determine your mileage between those documented trips. Begin with the evidence you have to fill in the rest of your driving activity.
This strategy can work if you’re missing mileage date for:
· The trip from your home office to your first meeting in the morning
· The trips between meetings
· The trips between passengers, if you’re an Uber or Lyft driver
· The trip from your final meeting of the day back to your home office
With digital map technology (for example, Google Maps), it’s very easy to estimate your missing mileage. You can use map apps to calculate the mileage from your home to your first meeting or passenger. As long as your meeting or passenger trip is documented, you can deduct the mileage from your home to that location. The same goes for the mileage from your last meeting or passenger back to your home.
If you also have the information of where one meeting or passenger trip ended and the next one started, you can also use a map app to find the mileage you drove between those two locations. However, be sure to keep thorough notes on each trip you’re putting in your new mileage log and to hold onto your trip logs or appointment lists as proof.
If calculating your mileage before, between, and after meetings or passengers can’t be done accurately, there is another method that sometimes can be used. Use the normal average mileage you drive each month and extend it out over the year.
Once you determine your tax-deductible mileage for one month and can prove you drove close to the same total mileage every other month of the year, you can multiply it by 12 to estimate your typical monthly mileage for the entire year.
So let’s say you drive for Lyft and were able to prove your mileage for two months this year. If you can prove that your income from Lyft and the total number of paid trips were the same for each month this year, and that you drove close to the same number of miles each month all year, then you could use your Lyft trip logs and income to prove what your mileage was for the entire year.
Begin using a mileage tracking app now so you don’t have to go through all this again next year. At 58 cents per mile, that’s a lot of money you could be saving on your taxes.
Any ATAX tax professional is happy to help you get started with tracking your tax-deductible mileage, showing you the best ways to organize your mileage logs, and help determine which mileage-tracking strategies the IRS will accept based on the proof you have.
To learn more valuable tax information, call ATAX toll free at 1-866-999-2829, or stop by an ATAX office located conveniently nearby. You can also follow us in real time on Facebook, LinkedIn, and Twitter.