If you are self-employed or drive for your employer, you know how tricky it can be to properly track fuel, mileage, repairs, and insurance for tax write offs.
The reality is, according to the IRS, we need to track mileage no matter what. They want to know what portion of our driving is business and what portion is personal. This determines the percentage of actual expenses that are a write off if you choose to claim them.
Mileage vs actual expenses is determined the first year you purchase a vehicle and is normally carried forward for the life of the vehicle. There are some exceptions but this is “the norm.” This brings up the discussion of how many miles you drive. How many are business vs personal? Are gas prices increasing? Does your vehicle require a lot of maintenance? Do you mostly drive around town or have a large territory?
Bottom line is, track your miles. Then discuss with your tax preparer which scenario is most beneficial. There are apps (both free and for a nominal fee) for your smart phones as well as paper mileage logs (which can be picked up at our office).
This is where the information about tax planning becomes important. If you know ahead of time, you can make those decisions and have the information available for your tax preparer to determine your deductions.