Thursday, January 10, 2013

IRS 2013 Mileage Rates Released

Working from home can mean
big business mileage deductions.
One of the big benefits of working from home is the ability to claim travel expenses for work related travel.  If you are an employee who works from home, you may occasionally need to travel into the office/plant etc.  In this case, keep track of your mileage.

Additionally, if you are a subcontractor, you can claim lots of mileage.  Whenever you run office related errands, travel to and from clients, and even travel related to sales.

One of my favorite perks is that I can drive on vacation and make sales calls in the cities I'm visiting.  If I'm doing legitimate business, there's no problem taking the deduction.  My sister lives in Atlantic City, so whenever I visit I make sure to reach out to clients and prospects in AC.

The 2013 mileage rates are up a bit from last year.

For tax year 2013 you may deduct the following:
  • 56.5 cents deduction for business mileage
  • 24 cents deduction for medical and moving expenses
  • 14 cents deduction for mileage driven for charity purposes
Keep a detailed log.  Pick up a small journal and get in the habit of writing down the odometer reading every time you get in the car.  

Mileage deductions really add up.  Every time you drive to Wal-Mart, if you purchase even one item for business, you can deduct the mileage to and from the store.

Your likelihood of getting audited is very low, however, I recommend keeping every receipt.  When you make a purchase at Wal-Mart, simply highlight the business expenses.  You can also do a separate transaction for larger purchases.

Keep close details, but don't abuse it.  The IRS has triggers in place that notice things like small businesses claiming extraordinary mileage.  They don't publish the information, but most tax software can tell you if you are putting yourself in the danger zone for business deductions.

Mileage is one of my favorite deductions, because it doesn't necessarily show up on your profit/loss statement because it's a personal business expense.  It helps keep your taxable income below your profit statement.  This is particularly useful if your business has resale value.

Disclaimer:  I'm not an official tax dude or law dude, so please consult your dudes for legal advice.  (In other words, don't sue me.)



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