If you’re looking to get the most out of your tax deductions for travel expenses, you need to log your mileage consistently both to receive the maximum returns and for any potential IRS audit.
Whether you’re a small business owner, self-employed, or just an independent contractor, the best way to do this is with a mileage tracking app – and there are many to choose from. In this article, we’ll take a look at the basics behind mileage tracking, examine an overview of apps available on the market, and go into some detail about how you can maximize your returns with this accounting software.
How Do I Track My Business Mileage?
Up until not so long ago, most business owners and independent contractors simply used Excel to track their miles for work-related business expenses. However, as you may have noticed – we now live in a digital world filled with useful apps, and expert opinion has shown that these apps and their add ons are the best way to do this.
But what kind of information do you actually need to record in order to satisfy the IRS’ needs?
- Your odometer readings from both the beginning of the month and at the end.
- The purpose of your travel, which essentially falls into two categories: business and personal. Every use of your vehicle that relates to business is tax-deductible. While travel expenses aren’t tax-deductible when you’re simply commuting to and from your place of work, if you’re running errands, visiting a customer, or even having a business lunch with a client – these trips fall into the category of business.
- Any refueling trips or stops you make. While it is not an IRS requirement to track every time you refuel, it can be extremely useful for breaking up your total mileage at the end of the month.
Where Can I Find These Mileage Tracker Apps?
The vast majority of these apps are available through Google Play and App Store. Some require you to whip out your credit card and dig into your bank account immediately, while others offer a free monthly trial. These apps are available to both Apple devices and Android devices.
What Kind of Features Will You Need?
Now that we’ve established the easiest and most efficient way to track your mileage is through an app on your phone, let’s take a look at some of the most important features you need in order to get the job done well:
- Web Dashboard: Most apps offer this feature as standard, and it is absolutely essential if you want to keep accurate logs, which you should. When you’re out on the job, you needn’t worry about using your laptop or personal computer, your phone and the app will be enough. When it comes time to consolidate all of your trips, however, this feature allows you to edit your trips and set right any inconsistencies which may prove problematic down the line.
- Sampling / Recurring Trips: Some apps have this feature available, though only the best offer it in an intuitive way. This feature allows you to set up data about any trips that might be habitual for you – for example to the store to pick up materials before you start visiting clients for the day.
- An IRS-Proof Mileage Log: You want to make sure that you won’t be fined by the IRS. One example could be a trip you didn’t record or a journey that you couldn’t have made given its conflict with previous trips you have recorded. You’re gonna need an app that can do this through making recommendations based on your habits, clients, and other parameters.
An Overview of the Mileage Tracker App Market
Now that we’ve taken a look at some of the features available on the market, let’s examine the full picture more closely. See the table below for the best mileage tracker app that best suits your needs:
With an average of $12,000 possible through business mileage deduction and the ability to reconstruct your unrecorded mileage retrospectively. If you find yourself staring down the barrel of an IRS audit, this feature becomes absolutely crucial, especially as the app lets you reconstruct your mileage for up to the last three years.
Popular apps include TripLog, MileIQ, and Everlance, which have many of the necessary features. These apps offer some absolutely essential features too, such as customer support, Plug and Go auto-tracking or vehicle movement monitoring. However, if you are a freelancer or you run a small business, you know that time is money – you want the best. For that reason, it’s worth taking a look at why you might not want to use certain apps.
What Are Some Disadvantages of a Mileage Tracker Platform?
While the above chart makes it clear that a variety of players provide a good product for this market, a simple mileage tracker which doesn’t offer all the features of the best apps can have many pitfalls. Let’s take a look at some:
- Battery and Data overuse: Most if not all apps use GPS tracking to some extent, but some of them really eat your data and battery, putting unnecessary strain on your phone. MileageWise mileage tracker only records and connects your departure and arrival points, meaning that your phone will be ready to go even after you’ve traveled a far distance to reach a client and need to make an urgent call.
- A Lack of Importing Functions: If you’re a small business owner or a long-term independent contractor then you’ll know just how important it is to have easy access to all of your clients’ information and to import your business contacts from several other apps or platforms, or even Excel if you’ve been logging your mileage there. Apps that lack these important functions create time-consuming barriers for business people on the run – certainly something to be avoided at all costs.
- Poor or Mediocre Customer Support: Are you being audited by the IRS for your mileage? You’re going to need those logs quick. Most apps don’t offer any kind of log preparation service, but there are some that have you covered. Customer success experts can help you reconstruct your mileage in a timely and efficient manner – leaving you to take the time you need to do the things you actually want to do.
At the end of the day, when it comes to tracking your mileage and getting the most out of your travel expenses, don’t waste time with providers who aren’t dedicated to helping you maximize deductibles. Choose an app you can truly rely on, you can see most of the factors in the table attached above.