If you're the type of agent who visits your clients, or even goes door-knocking, you need to be tracking your mileage. At a rate of 58 cents per mile for your 2019 tax deductions and 57.5 cents per mile for your 2020 tax deductions, why wouldn’t you?
You Need a Mileage Tracking System
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 track mileage consistently, it needs to happen automatically, with very little input from you.
Remember: if you drove as little as 1000 miles for business in 2019, that’s worth a $580 tax deduction.
We've found two different types of solutions that both track your mileage automatically, making it a lot easier to benefit from the tax deduction.
MileIQ for Mileage Tracking
MileIQ is an app you download to your smartphone. 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.
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.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.
This is a really well-designed app, and it's easy to use. So what does it cost?
Cost of MileIQ
MileIQ has a free "Basic" plan that allows you to record 40 free 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 "Unlimited" 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.
Automatic for Mileage Tracking + More
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.
The extra features of this device are a little more interesting than the mileage tracking, including:
- Crash alerts
- Engine light diagnostics
- Maintenance reminders
- Driving history and insights
- Cashless toll payment processing
- Real-time location and sharing
- Roadside assistance
- Parking tracking
- Smart home integrations
- App integrations
However, on top of all these extra features, you also get business expense tracking. Mileage can be tagged as business or left untagged if personal.
Automatic can connect to other services too, so if you use Quickbooks or Xero for your accounting, Automatic can send your mileage records to those services, among others.
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.
Automatic’s pricing for the adapter is $99.95, and after a 6-month free trial, it costs $5 per month.
Start Tracking Your Mileage As An Independent Insurance Agent
If all that you care about is tracking mileage, MileIQ is fantastic. It’s built to do one thing, and it does it well.
On the other hand, if you find that the extra features in Automatic are something you’d use, then the $100 purchase plus $5 per month after a 6-month free trial might not be a bad buy.
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.