Freelancers, are you leaving money on the table?

As a freelancer, it generally feels that your time is better spent looking for new business and invoicing your customers than at your office making sure you claim all your expenses. After all, who cares about 20 miles for a quick client visit? Well, that is about $10 you passed on. Again, not a big deal, but we are talking $10 net that disappeared from your wallet. And to make these $10 appear again, you need to earn $15-20 depending on your tax bracket. Suddenly, claiming your expenses is just as valuable as making more money with your business isn’t it? Here is how to claim your mileage easily.
The first thing you need to know is how much you can write off per mile. For 2016, the IRS set the following rates:

• For business use, the official standard mileage is 54 cents.
• It drops to 19 cents per mile driven for medical reasons or moving purposes, and 14 cents per mile driven for charity.

The rate is down from 57.5 cents per mile for business use in 2015. Even if the reduction is due mostly to falling oil prices, that is one more reason to track every single mile and not leave money on the table!

If you drive a vehicle with a higher cost per mile, you can actually deduce your actual expenses, but the mileage deduction might work best considering it requires way less effort than keeping every receipt for gas and maintenance for a whole year and tallying them properly. In this case, I would argue your time is more valuable, unless you have an assistant.

Picking the standard mileage deduction however, does not allow you to deduct other car related expenses such as maintenance or repairs.

While you can probably expect the mileage deduction rate to remain the same for the whole calendar year, you should check for updates once in a while if gas prices continue to drop or start rising sharply. Mid-year corrections have happened before.

 

Now how thorough are you when it comes to tracking miles? Do you always remember, even when you leave in a rush? And if you do, how much time does it add to your busy day, day after day? Well, now there is an app for that. Just install MileIQ on your phone and it will automatically detect when you are driving, and keep a log of the drive. Then with a simple swipe, you can classify the drive as business or personal, and claim expenses accordingly. You can also classify your drive as medical or charity, as we have seen above, the deduction per mile is lower.

You can also log in more details, such as tolls and parking fees, and your vehicle’s odometer reading. MileIQ lets you customize your work hours and customize specific drives as well.

On the tally, you can see month by month how much money you can claim back to the IRS thanks to MileIQ. As we discussed above, it does add up fast, at 54 cents a mile.

Not only do you save money and a lot of time compiling the data, you also have a secure storage of that information in the cloud, should your client, your accountant or the IRS inquire about your mileage.

The MileIQ service is free for up to 40 drives a month, that is two per work day roughly, which should be more than enough for many freelancers. For unlimited drives, you are looking at $59.99, an expense you will recoup in just 112 miles you would have forgotten to track.

You can download the MileIQ App for free and start your free trial right away

Here is how you do it.

You are going to get a 40 drive free trial by signing up via the app or MileIQ.com

Then create an account using the special MONEYYOURWAY20 promo code and you will get 20% off an annual plan for being a reader. Just know that you need to upgrade on the MileIQ website to receive the discount.