If you earn self-employment income, let an expense and mileage tracking app record every business drive and receipt as it happens. A log made at the time holds up better with the IRS than one rebuilt in April, and the trips you’d otherwise forget are worth more in tax savings than the app costs.
The trips that slip are the short ones: the supply run, the bank deposit, and the hop between two client sites. A log pieced together from your calendar at tax time catches the long drives and misses the rest.
If you’re self-employed, every business mile you log is worth a deduction at the IRS standard mileage rate, which the agency resets each year. Most W-2 employees can’t deduct unreimbursed work miles, though a clean log still backs up a reimbursement request. One 20-mile round trip to a client each week comes to about 1,000 miles a year, a deduction worth several hundred dollars. On self-employment income, a deduction trims the 15.3% self-employment tax as well as income tax. Counting the 20% deduction for qualified business income, a filer in the 22% bracket saves about $30 in federal tax for every $100 deducted, by our math.
Even the $140-a-year app costs less than the tax those miles save. Unlimited tracking costs about $70 a year at Everlance and $140 at MileIQ, billed annually, and the fee is itself a deductible business expense. A light schedule fits in the free plans. Everlance’s auto-detects 30 trips a month and stores receipt photos, and MileIQ’s covers 40 drives a month.
The IRS gives more weight to a log kept at or near the time of each trip than to a statement written later. The app records each drive’s date, distance, and start and end points as you go, and you add only the business purpose.
Sort each drive as business or personal the same day. Commuting to a regular workplace never counts, but when your home office is your principal place of business, a drive from it to a client does. Snap each receipt at the counter, and pull the year’s totals from the app when you fill out Schedule C.
Turn tracking on before your next business drive. After a month, multiply the logged business miles by 12 and compare the total with what you claimed last year. If your business hasn’t changed, the gap is the deduction your memory was leaving behind.
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