If you are the type of agent who visits your clients, or even goes door-knocking, you need to be tracking your mileage. At a rate of 54.5 cents per mile for your tax deductions, why wouldn’t you?
Actually, I can answer that. People don’t track mileage because they don’t have a system in place. They either forget, or find that it’s a hassle to pull out a notebook and write it down. To do this consistently, it needs to happen automatically, with very little input from you. Remember, if you drive as little as 1000 miles for business, that’s worth a $540 tax deduction.
Below are two different types of solutions that both track your mileage automatically.
MileIQ is an app you download to your phone. Since we all have our phones with us at all times, the app runs in the background and automatically tracks each trip you make, using your phone’s GPS capability.
After you’ve driven somewhere, an alert pops up on your phone, asking you to classify your trip. You simply swipe to the right to classify this as a business trip, or to the left for personal.
Better yet, swipe and hold to enter a purpose for the trip, which you’ll need if you ever get audited by the IRS. There are some built-in business purposes that you can customize, such as Customer Visit, Meeting, Meal/Entertain, Airport/Travel, etc. On the personal side, purposes include Medical, Charity, and Moving, which are also deductible.
At tax time, you can easily export reports to give to your accountant, and each week, the app will email you reports showing how much your potential deductions are.
This is a really well-designed app, and easy to use. So what does it cost? There is a free plan that allows you to record 40 drives per month. If you drive your car more than one place per day, that gets used up pretty quickly, so this is really a way for you to test out the app and see how it works for you before moving to a paid plan.
The paid options are either $5.99 per month, or $59.99 per year. Considering the time and effort it saves you, plus the deductions it can get for you, this seems like a no-brainer to me.
Tracking mileage is just one part of what Automatic can do. This is a combination of a mobile app and an adapter that plugs into your car’s diagnostic port under the dash.
This is a great solution if you not only want to track mileage, but also improve your driving habits (aggressive acceleration or hard braking), decode engine problems, locate your parked car, get help in emergencies, get custom low-fuel warnings, and connect to lots of other apps.
The extra features of this device are a little more interesting than the mileage tracking, but you can learn about those on their website. But mileage can still be tagged as business (or left untagged if personal). Automatic connect to other services too, so for example if you use Quickbooks or Xero for your accounting, Automatic can send your mileage records to those services, among others.
Automatic’s pricing is for the adapter itself, which is $99.95. There are no monthly fees to use it.
If all that you care about is tracking mileage, MileIQ is fantastic. It’s built to do one thing, and it does it well. The downside is that there are ongoing fees, though they’re minimal. On the other hand, if you find that the extra features in Automatic are something you’d use, then you are set after your one-time, $100 purchase.
If you use something already, whether it’s a paper logbook or some other app or system, I’d love to hear about it in the comments below.