By Roxanne Richardson
Owner and Founder
Founded just over 5 years ago, Blue Accounting Tax and Consulting Firm has built a reputation for providing quality tax services to clients in Alabama and throughout the United States. Our pride lies not only in providing quality service but also in educating our clients on how they can better themselves financially by making informed decisions about their taxes – this makes sense as the founder teaches accounting at the local University.
Whether we’re handling tax preparation, tax debt resolution, or advising you on the best way to keep your books, we make sure our clients have the information they need to make wise tax-altering decisions. For instance, few small business owners are aware of the need to maintain a contemporaneous mileage log for the vehicle they use for business.
This tax regulation requires anyone wishing to deduct any vehicle-related business expenses to maintain a log of all trips made in that vehicle. Each mile driven, including business miles, commuting miles, and even personal miles, must be recorded. The mileage deduction rate is currently 62.5 cents per mile if you calculate your vehicle expenses using the standard mileage rate. You have the option to deduct actual expenses, where you simply deduct a percentage of your vehicle expenses based on the mileage accumulated for each purpose. The mileage log is required for both methods of vehicle expense deduction.
Do you know there is a distinction between commuting miles and business miles? There is, and it has a major impact on your deduction. Commuting miles accumulate throughout your daily commute to and from a set workplace. Once you leave the workplace, home, or other locations to engage in other business activities that require you to be in a particular place, business miles begin to accumulate. All other miles, except for medical miles, are considered your personal miles. Medical miles can be useful as a tax deduction, but that is a subject for another article.
Without an understanding of the tax law, you risk overpaying or underpaying taxes, missing out on significant tax deductions that could save you money, and taking tax positions that won’t hold up in an audit, which could lead to significant tax increases and related penalties. If a vehicle expense is called into question during an audit and the client failed to keep the business mileage documented with the specificity required by the tax code, the deduction will be disallowed. Consequently, you lose out on money, must pay more taxes, and experience unnecessary financial stress, penalties, and interest.
As a reader of the South Huntsville Neighbors, we want to share this information to prevent you from making unwise tax decisions. We are always looking for new topics that will help our readers. If you have any tax-related questions, we would love to hear them! Please email with the subject line South Huntsville Neighbors to firstname.lastname@example.org. Perhaps our next article will answer your question and give our community the information they need to make informed tax decisions.