Every year, the Internal Revenue Service sets a standard rate each mile driven for work is worth. While tracking and reporting these miles can be a headache for business owners and employees, it is vital to your tax return. In some cases, incorrect mileage reporting can lead to audits. Understanding the current rates and rules of mileage reporting, as well as the digital apps available to help you track these miles will set you and your business up for success.
In 2018, the standard mileage rate is 54.5 cents per business mile, up just 1 cent from 2017. For medical or moving purposes, the standard mileage rate is also up 1 cent from last year. It is now 18 cents per mile. When driving for charitable purposes, the rate has remained steady at 14 cents for several years now. While everyone loves being reimbursed for mileage, it is important to note that there is not a federal rule forcing private businesses to reimburse. There are, however, labor laws in states like California and Massachusetts that may force a mileage reimbursement.
We get a lot of questions in our office about whether or not the new tax reform has caused any additional changes to mileage reimbursement. The answer is yes. In 2018, W2 employees will no longer be able to deduct non-reimbursed expenses like mileage. You can still claim this deduction on your 2017 tax return, but not next year.
In a world that is becoming highly digitized, we recommend utilizing apps or systems to help track your mileage. Apps like MileIQ, MileWiz, and SherpaShare are among the most frequently used. In case of an audit, it is crucial that you have a very specific mileage log. Including the date, time, location, and reason for your driving will set you up for success!
If you need help racking up your mileage and deducting it on your tax return, Polston Tax can help! Our team of Tax Accountants can help you get through all your business expenses and figure out where and how to deduct it. Call 844-841-9857 or click hereto schedule your free consultation!