Mileage Log = Money In Your Pocket

It's coming on tax time and if you drive at all for business, you'll want to be sure to log your miles for 2009, so you can legitimately deduct the cost of driving your car from your income. For 2009, the IRS mileage allowance is as follows:

• 55 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

So let's do a little math. If you drive your car 5,000 miles per year for business, at 55 cents a mile, you can deduct $2,750 right off the top of your income. If you're in a 28% tax bracket that equates to a tax savings of $770 for the year.

On the other hand, if you drive 10,000 miles per year for business, you'll be able to deduct $5,500 and in a 28% tax bracket, that equates to a tax savings of $1,540. That's a bunch-o-money back in your pocket!

But tracking mileage is soooo tedious isn't it? It doesn't have to be, and if you don't keep a mileage log, you'll have a hard time substantiating that deduction down the road. No proof = no deduction. In fact, when I lived in Philadelphia several years ago, I used an accountant who actually refused to factor in my mileage deduction unless I provided him with my mileage log, so I learned way back then the importance of keeping an up-to-date log on a daily basis. Trying to re-create every trip you've driven for even a week is torture, and it would be impossible for several months or more. Save yourself the aggravation and do it every day. The simplest way to track your mileage and track it accurately is to create...

a very small, simple new habit.

First, get a mileage log at your local Office Depot -- they're about three bucks. Keep the log book and two pens in the console of your car or on the seat next to you. Before every trip, just write in the odometer reading before you start the car. Hit the trip odometer to reset it to zero, and when you arrive at your destination, just write the new mileage. I know it sounds like WELL DUH... but you'd be surprised how many people simply don't keep one at all and end up either painstakingly re-creating one at the end of the year or not taking the deduction at all. Both are just silly ideas, if you ask me.

It takes about four seconds to write your odometer reading and I discovered that if I consistently reset the trip odometer before I start my car, I don't even have to do any math (which you know makes Verbal Girl very happy).

A good way to force this new habit is to put the mileage log in the middle of your driver's seat for the first couple weeks. This way, you have to pick it up before you begin driving, and it will remind you to write down your starting mileage. At the end of every month, before you turn to the next month's page, total your miles for that month and circle it on the bottom of the page. Before you know it, you'll be logging every trip and by the end of the year, you'll have twelve months of pre-totaled miles that you'll get money back on at tax time!

It's almost too simple to talk about, but isn't saving a bunch of money on your taxes worth spending three bucks on a log book and creating a ridiculously easy new habit?

Comments

[Janine Adams]

Hear, hear, Monica! I keep that very same mileage log in the visor of my car (I don't have a center console) and it's now my habit to pull it out and write in it as my garage door is closing. I logged 6000 business miles last year--a nice tax deduction. To me, keeping track of the miles as I go is so easy and completely worth the effort. Plus, it allows me to capture trips to the bank and business-related trips to Office Depot and Target.

[Monica Ricci]

Janine, that's exactly what I do. As the garage door is opening before I leave the house for a client appointment or to go to Office Depot, I pull out the log, jot the starting mileage and then I leave the log sitting in the dashboard well.

When I get back home, the log book lying in the dash well is a visual reminder for me to jot the ending mileage. Then I put the log book back into the console. It's THE simplest habit and it's just one more thing that makes tax time easy. (that and my AWESOME CPA!!) :)

Thanks for your comment and see you in Orlando!
~Monica