Commuting from showings to closings to open houses can take a toll on your odometer. While your vehicle is one of your most important resources as a REALTOR®, it can also be convenient come tax time. Did you know that the mileage deduction for 2018 is 54.5 cents per mile? Now a couple of quarters each mile may not sound like much, but it can really add up. Let’s assume you drive 50 miles a day on average, five days a week, 48 weeks a year. You’re looking at approximately $6,500 that can be deducted from your taxable income. If you aren’t recording your mileage for tax purposes, you are literally leaving money on the table, or road.
How Do You Record and Report Your Mileage
Unfortunately the IRS doesn’t using the honor system. This means that you’ll need to maintain a compliant mileage log. In order for a log to be compliant, it will need to include the following information:
· The qualifying mileage for each trip.
· The dates of each trip.
· The locations involved in each trip.
· The business purpose behind these trips.
Now you won’t need to submit this data when you file your taxes, but it should be saved with your tax documents. It is recommended to keep all of your tax records for at least three years.
What Miles Can You Include for Tax Purposes?
There are a number of different driving purposes that meet the IRS’s definition of “business related”. Visiting new properties, meeting prospective and existing clients, traveling between offices, even picking up different supplies. It is important to know that your commute (from home to work and vice versa) cannot be included in these calculations.
What is the Best Way to Track Your Miles?
There are three ways to track your mileage that the IRS will accept. You can keep a manual, handwritten log. You can track your mileage digitally with photos and a spreadsheet. You can also download a mileage tracking app on your mobile device. A manual log is typically the cheapest option, as it only requires a notebook and pen. The downside to this option is that it is difficult to accurately record if you forget an entry, and if you lose the log, there is no backup. The digital option with photos and spreadsheets can be more reliable, it also tends to be more work. Mobile apps that automatically track and record your mileage are usually your best bet.