Select Page
Use the Business Mileage Rule to Earn More Deductions on Your Tax Return

Business Mileage – Are you a small business owner always looking for ways to decrease your tax bill? If so, you may be interested in the business mileage rule. This rule allows small business owners to deduct the cost of their business mileage from their taxable income. You must keep track of your business mileage to qualify for this deduction. You can do this by keeping a monthly record of the number of miles you drive for business purposes.

It’s essential to remember how to correctly record commute distance, significantly if you’re delayed by other activities when you arrive at your home. Write in building your calendar (or other everyday record or app such as MileIQ) your commuting mileage like: “home to office, 10 miles, commute”.

Ugh! Nobody Likes that 

We, positively, detest commuting mileage. You should too. 

It’s personal. It’s not deductible. But, with knowledge, it is avoidable

Let’s stop commuting, and instead make those trips from home to your office deductible.

The legal system has a couple of options to decrease commuting from your home to the office that you work from:

  • Create a temporary business stop on your way to the office.
  • Set up a home office that satisfies the requirements to be a principal office.

Temporary Business Stop Strategy for Business Mileage

Temporary Business Stop (TBS) is a unique strategy for eliminating commuting. TBS is a strategy that allows a business to stop operations for a brief period. During this time, the employees would work from home. This would enable the employees to avoid commuting and save on transportation costs. The business could also save on rent and other occupancy costs. The TBS strategy could be used for companies closing temporarily or relocating.

The more widespread tool is called the office-stop strategy. In this instance, the stop allows you to deduct the commute from your home to your office as a deductible business trip.

Example 1.

Sam, the property damage and casualty insurance agent, doesn’t claim a home office deduction. He must file a claim for a property before the insurance company issues the policy, so he stops by to take photographs. Sam’s trip from his home to the property and then from the property to his downtown office produce business miles.

Sam drives from his home to his office, and it’s a non-deductible trip. But according to IRS guidelines, only the first business stop from your place of residence to a place of business counts as your principal office. If this is the case, the IRS classifies your trip from your home to that place as the first stop, and that trip is a non-deductible commute.

Way out for home offices 

If you have a home office and a principal city office, you do not need to leave your home to get to your city office. Having to work from the home office before you go is entirely unnecessary. To qualify for the criteria, the home office must be legal as a principal office.

For instance, you have an administrative office in your residence that qualifies as a permanent office. You drive 11 miles from your home to your city office, work all day in your city office, and then drive the 11 miles back home. This 22-mile return trip from your city office is deductible as business mileage.

The simple answer to the problem is that you can analyze the two methods for eliminating commuting; you’ll find that the most effective way is to set up the administrative office in your residence.

Additional trips 

Now moving to the previous query about business and personal mileage, “What happens to those trips that start and end at your city office?”. If your city office of a long-distance business journey ends up in a specific business destination, you have business mileage. But if the business journey is for personal reasons, you have personal mileage.

If your route includes both business and personal stops, and the individual visits are not too far away, you can overlook the personal stops and count all the mileage as a business.

For instance, if you are going 10 miles to buy office supplies, but you set off for a 1-mile detour to pick up your dry cleaning before reaching your destination, the trip to the office supply store was 9 miles, and the return trip was 19 miles. This act is considered de minimis, meaning that you could count 19 miles as business mileage. 

Your mileage log may look like this: For office supplies, I travelled to Staples at 19 miles, including a minor 1 mile for dry cleaning. 

Methodology for sampling your Business mileage

One of the critical criteria for successfully filing your mileage log with the IRS is that you make personalized notations over at least three consecutive full months.

Keeping the mileage log for three months is necessary but making a more extended mileage log is far better.

Points to remember About Business Mileage

Your mileage deducts when

  • Driving from home to business stop and back to the office 
  • Going from residential office to city office
  • Moving from one business stop to another business stop (or it could include a de minimis visit)
  • From home to a business stop and returning to home office 
  • Driving from house to main city office 

Rather than driving a great deal of personal mileage, you will save significant personal or commuting mileage by establishing a principal office at home. If you have any questions on how to implement these strategies in your own business, reach out to our team at 281-440-6279.

The Molen & Associates Difference

Mike Forsyth

“Super helpful and timely. This is our first year with them and we look forward to trusting them with our taxes and business books for years to come.”

Caitlin Daulong

“Molen & Associates is amazing! They run an incredibly streamlined process, which makes filing taxes a breeze. So impressed with their attention to detail, organization, and swift execution every year. Cannot recommend them enough!”

Sy Sahrai

“I’ve been with Mr. Molen’s company for few years and I felt treated like family respect and dignity. They are caring, professional and honest, which hard to find these days. Love working with them.”

Corporate Transparency Act – Beneficial Ownership Reporting: Are You Prepared?

he Corporate Transparency Act (CTA), enacted as part of the Anti-Money Laundering Act of 2020, introduces significant changes in beneficial ownership reporting requirements for certain entities operating in the United States. These regulations, set to take effect on...

The IRS is Cracking Down on S-Corp Salaries: How To Your Reasonable Compensation is Safe

The IRS is turning its attention to S-Corporations (S-Corps) and the salaries paid to shareholder-employees. Ensuring that you are paying yourself a "reasonable compensation" is crucial to staying compliant with the law and avoiding potential financial consequences....

Should You Be Making Quarterly Payments?

Tackling your taxes as a small business owner can often feel like a high-stakes game of strategy and a little guesswork. One of the key moves in this intricate game is mastering the art of quarterly tax payments. If you're looking to stay ahead in the tax arena and...

Slash Your Self-Employment Tax

Hey there, hardworking small business owners! Tax season is no walk in the park, but we've got a game-changing secret to share that could put more money back in your pocket. If you're tired of paying hefty self-employment taxes and want to keep more of your...

How Tax Planning Can Help You Grow, Preserve and Protect Your Wealth

Tax planning services from Molen & Associates help you make smart decisions regarding your taxes. We provide individualized advice and information that can save you money and protect your wealth. Our tax planning strategies go beyond just filing your taxes – we...

Why a Local Family Tax Firm is Your Best Co-Pilot in Space City!

Howdy, Houston small business owners! Tax time can be a real whirlwind, but fear not – we've got your back! When it comes to saving time, money, and headaches on your taxes, partnering with a local family tax firm can be the ultimate secret weapon. In this article,...

Uncovering the Top 5 Deductions to Save Time, Money, and Stress!

Howdy, fellow Houstonians! As small business owners in the heart of Texas, we know that taxes can be a daunting and complex puzzle to solve. But fret not, because today, we're here to equip you with some mighty tax hacks that will not only save you time and money but...

Streamline Your Finances with Molen & Associates: The Power of Corporate Accounting

In the fast-paced corporate world, managing finances with precision and expertise is paramount for the success of any business. Corporate accounting plays a vital role in ensuring that financial records are accurate, compliant, and capable of driving informed...

Mastering Your Numbers: The Secret to Small Business Tax Triumph!

Hey there, fellow small business owners! As entrepreneurs, we know that taxes can be a bit overwhelming, especially when you're trying to run a successful business. But fear not – we're here to equip you with the ultimate tax-saving superpower: mastering your numbers!...

Should I Get Life Insurance For My Kids?

Should I Get Life Insurance For My Kids? No parent wants to consider the possibility of collecting a death benefit on their child's life. And this is the reason many families are exploring the option of investing in a child life insurance policy to ensure their...

Request an Appointment Today

2 + 10 =

Call us at

Pin It on Pinterest

Share This