Have you been thinking of what additional expenses you can take yet for this year? Maybe this is something you haven’t considered . . .
How about claiming mileage on trips you might not have even thought about? Did you know the per diem rate for 2023 is 65.5 cent per business mile driven? This can really add up. Plus, if you have an older, used vehicle, this deduction can even add up to more than the value of your vehicle over the years.
Sometimes, it’s easy to forget the miles you add for business purposes. Have you dropped brochures or business cards off anywhere? How about running to the store and grabbing supplies? Did you meet with a potential client or customer? Did you drive anywhere to network or promote your business? What about driving somewhere to check out the competition? If you know the dates and where you drove to, these are all business mileage-related expenses.
With a record of where and when you traveled for these types of purposes, you can add up the mileage of your total round trip and multiply it by 65.5 as a business deduction.
Mileage Deduction Record-keeping
It is vital that you have records of every trip in case of a future audit. To use the standard mileage rate, you must:
1) Own or lease the car
2) Maintain a detailed log of your business-related mileage. This should include:
Starting and ending locations
Purpose of trip
Number of miles driving
The date
Exceptions
Before you claim mileage, please note the following rules:
You must not operate five or more cars at the same time, as in a fleet operation,
You must not have claimed a depreciation deduction for the car using any method other than straight-line,
You must not have claimed a Section 179 deduction on the car,
You must not have claimed the special depreciation allowance on the car, and
You must not have previously claimed actual expenses on the vehicle you are using. Once you start claiming mileage on a vehicle, then, in later years, you can use the standard mileage rate or actual expenses. Once you use actual expenses, you can no longer claim mileage on that same vehicle.
You cannot claim mileage for your regular commute to your business.
Be sure you’re taking all your deductions and expenses. Many business owners misfile their tax returns and lose thousands of dollars by not claiming all expenses. How does this happen? By books not being properly entered and updated. Hiring a bookkeeper keeps accounts reconciled, catches mistakes, and helps you make sure all financial records are accurate and up-to-date, reducing the risk of errors in tax filings, loan applications, or investor/partner reports. It also helps you make sure you’ve deducted all your expenses. See: https://workover.pro/articles/2023/4/20/common-business-mistakes-that-cost-you-money-not-updating-your-books