Why A Mile Tracking App Is A Good Idea For Self-Employed Taxpayers

Record-keeping is an unenjoyable part of being self-employed. Mileage Tracking apps however, are easy to operate and save a lot of hassle for those taxpayers clocking their business mileage usage.

Being self-employed is both a responsibility and a privilege. It is the dream of many people to start their own business. The increasing number of startups and freelancers is a testament to this.

Paying your taxes is certainly less fun when you’re self-employed, though you do get the benefit of some tax deductibles.

For example, if you use your own car for your business you can deduct the value of the business miles on your tax return. You can use two methods for this:

You calculate the actual cost that year of operating your car  - including gas, oil, repairs, tires, insurance, registration fees, garage rent, licenses, and depreciation or lease payments. 

Once you have a number for that, say x; then you need to calculate which percentage of your car use that year ( Mileage attributable to business/Total annual mileage) was for business use. Say y%. Multiply x by y and there you have your deductible.

Every year the IRS sets down the value of the tax deduction per business mile.

Basically, you calculate the total annual business miles you travelled (driving from and to work sites, meet clients, airports on business trips, temporary job locations, for job interviews in your current industry or work-related errands.) You multiply that number by the IRS value which is 53.5 cents this year and that’s your tax deductible.

Calculating your mileage at tax time is never fun. But as someone who is self-employed it is better to do this tedious work to take advantage of tax deductions you can avail.

Mileage tracking apps like MileCatcher have made it easier to keep track of your mileage and the portion of that which is business related vs. personal (assuming you are using the same vehicle for both purposes.)

When you are looking for mile tracker apps, choose one that is easy to use, offers you many free features (though you may have to pay for some advanced ones), can connect with your employees (if you have any) or your accountant. Most apps have automatic drive capture and mail reports to you in a variety of formats.  

The best apps make it easy for you to classify trips as personal, business etc. add on other trip expenses, use intelligent features which classifies return visits to the same location based on the first time you classified it. 

Some also allow you to enter a custom trip purpose (say Customer Product Servicing) which helps you when you prepare your mileage log.

Some fields required by the IRS in the mileage log you submit are:

The date of your trip

Starting point, destination

Route to prove distance driven

Purpose of trip

Year Starting mileage

Year Ending mileage

Other trip-related expenses (Eg:tolls, parking)

So, when you are looking for mile tracker apps, opt for a good one that produces reports which contain the above fields - in a format you are comfortable with, say .xls - and your life as a self-employed taxpayer will be that much easier.