Last updated on: June 10, 2022
A great number of companies have decided that the safest thing to do during a pandemic is to send their employees home, to work from there. Remote working has its pros and cons, but one thing is for sure when it comes to mileage: it greatly reduces commuting miles, which is rarely deductible anyway. In addition, driving from your home directly to a business client will be a business trip in your mileage log.
By switching to complete home office mode or following a hybrid approach, where employees and employers go into the office based on a schedule to make sure there are always just a small number of people in one space, commuting miles can be radically reduced. As commuting is only deductible as a business expense if our home is our primary place of business, mostly commuting cannot be deducted as a business expense.
However, if the number of customer visits in the company has not changed drastically during this home office period, it means that the business-personal trip ratio will improve significantly.
What does this mean, tax-wise?
Mileage deduction or reimbursement can be based on two methods. The first one is called the standard mileage rate that is issued by the IRS every year. In the first half of 2022, the rate is 58.5 cents/business mile, while in the second half of this year it is 62.5 cents/business mile. If a taxpayer drives an average of 15,000 business miles a year that can be multiplied by the average of 2022’s rates ((58.5 + 62.5) / 2 = 60.5), resulting in a $9,075 deduction or reimbursement / tax year.
15,000 miles x 60.5 cents = $9,075
The second method is the Actual Expense Method, where taxpayers need to keep track of all their actual expenses (e.g. gasoline purchases, oil and maintenance expenses, interest expenses on the vehicle loan or, lease payments for the tax year, annual depreciation of the vehicle, registration fees, insurance, repairs, tolls, tires, garage rent, parking fees). Using this method Mileage Tax Deduction or Reimbursement can be higher but it requires more rigorous record-keeping habits.
A higher ratio means more deduction
The higher the ratio of your Business trips, the more you will be able to get reimbursed for or deduct from your business-related car expenses. In order to support the declared ratio, it should be clearly stated in your mileage log whether the trip is for Business or Personal purposes. Reporting a 50% Business Use compared to reporting an 80-90-100% Business Use can result in a difference of 6,000 USD / Year!
Mileage logs will be worth More Money
If your business-personal trip ratio looks better during this pandemic, that means, that with mileage logs, you will be able to claim back more money, which we are sure will come in handy.
With the MileageWise Mileage Tracker App, you can easily track your Business trips, Personal trips, and Refuelings On the Go. The AdWise feature will make an IRS-proof Mileage log recommendation for you by taking into account all the legal regulations about Mileage logging and Tax return policies. Using this technology your Mileage Log will correspond to the exact Mileage you have driven according to your Odometer, even Retrospectively.
In the process the Built-In IRS Auditor checks and corrects 70 logical conflicts with a Smart Algorithm ensuring that your Mileage log will be IRS-proof, meeting Every Expectation.
If you are still worried that you can’t keep track of your mileage, Outsource It to our Experts. They will be more than happy to help!
Similar blog posts
- MileageWise has passed the IT-security exam with an A+ - February 1, 2022
- How to track Business Mileage - March 5, 2021
- Top 7 Reasons to make a Driving log - March 3, 2021
- Looking for an IRS-Proof Mileage Log? You're In The Right Place - October 20, 2021
- Mileage Logs for Real Estate Agents - February 18, 2021