Mileage Tracking with BizMile Tracker

Posted by on Dec 9, 2011 in Audits, Bookeeping, Information, Tips and Dates | 0 comments

If you use your car in your job or business and whether you use it regularly or irregularly for that purpose, you may deduct part or the entire cost of its operation (subject to limits – of course).

However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use, along with your mileage for charity and medical purposes.

Generally speaking, you can figure the amount of your deductible car expense using one of two methods: the standard mileage rate or actual expense. (see Car and Truck Expense Deduction Reminders and IRS Publication 463, Travel, Entertainment, Gift and Car Expenses).

If you use the standard mileage rate, you can also add to your deduction any parking fees and tolls incurred for business purposes, You may also be allowed to use other deductions like meals or lodging.

Please keep in mind that these deductions are reported on various forms, please visit with a tax professional.

As a preparer I find it is exceedingly difficult for the average “road warrior” to keep track of all their mileage/vehicle expenses. It is even more difficult for the average small business owner or family to keep track of their mileage.  In fact, most don’t or they don’t know how. Sure like any good preparer I provide logs books for those who say they will, write down their mileage.

Internal Revenue Code Section 274(d) (4) requires that you keep detailed records to document the business use of “listed property”. For automobiles you would keep a mileage log.

Honestly I have not seen one completed 100%. When it comes to tax time these/those books are always incomplete or are missing months of information, or they did it for a few months and decided it required to much effort.

    If this describes you, don’t feel bad or insulted, you are part of a great group of really good people, and your 1040’s come out.

Okay, all said and good but now you are being audited for your mileage on Sch A, Sch C, or Form 2106. Or even maybe worse, all three. . . What are you supposed to do? Are you just going to take the hit? Or are you going to do what you can to provide yourself, your tax professional and your Auditor with a validated mileage log?

For your sake, your tax professionals sake and the auditors too, I hope the latter is your choice.

“Validated mileage log?” Yes, validated. If you receive an audit notice from the IRS, you will need to produce the relevant documentary proof to validate the deductions being audited.

BizMile Tracker is your answer. This online program is the best mileage log assist I have seen. It is so good I have made it a part of my companies (L & R Tax Preparation) Audit Information gathering. I am also working on encouraging clients, to use this service during the year not just for audit situations.

What is it? BizMile Tracker is an award winning online mileage tracking service that gives you the first real solution to the question asked by tax professionals and auditors alike, “Where are your vehicle mileage logs?”

Let us say you received a letter from the IRS, in the IDR Form 4564, they want to see your mileage log. You contact your Tax Professional and you agree there currently is no log of your mileage and s/he sends you to BizMile Tracker so you can recreate your information.

If they don’t please ask them about it. If they aren’t aware what it is, direct them to the BizMile Tracker site, then please use it on your own behalf.

So you have landed there you signed up, and logged in. What are you supposed to do next?  Please note BizMile Tracker has a great array of help and guides. What I am about to present here is just a general look so that you can see it. Your Audit year is say 2009 (busy year for Audits, and as the IRS gains momentum with the RTRP program they will be getting more diligent with audits) they need your logs for the cars you are using for Business (or wherever you used you vehicle).

You reported:

  • 9,568 miles for business
  • 599 miles for charity
  • 57 medical miles
  • no personal mileage

Okay lets validate this because, and be honest, when you told all your total mileage totals to your Preparer, you used the “guesstimate method” .

So lets document them;

You have the dates where we went and noted in your day planer why you were there. When you first open BizMile Tracker you have a blank slate. You will need to create your trips. I started this by creating a database of addresses where I go to and from.

Go to the “address book” from its button at the top.; then click the  “add new address” button, you end up here:

Enter your address and click verify, Using Google your address is verified which means a corresponding map coordinate (or lat, lon.) was found using the street address.

Click Done

If you don’t have an address, you can use intersections or search for business by name.

As you can see there are several addresses in this address book.

Now let’s record a trip.  From your Summary page you’ll click “add trip” or you can click the “trip builder” button at the top.

My preference is Trip builder. With all the addresses entered it is the easiest, but you can do the same thing using the “add trip” button using a three step guide provided within the software.

Here is the window you”ll get:

Simply adjust your trip date, click and hold the address/location from your address list and drag it down to your trip log box. You’ll do this for a from and a to.

Click save and close.

That easy.

You are taken back to your year to date summary page.

Lets say you notice a trip and in the “Type” area of this trip shows it being a Business trip (this is a default setting that you can adjust to suit your needs) when in fact it was for Charity.

You also had to pay for parking when you got to your destination. Just highlight your trip by clicking on it, Click where it says “Type” and you are presented with a window that allows you to simply edit the type of trip you made.

Same with a list of other expenses while on the trip, Click the dollar amount next to the type. You are presented with a widow looking like this:

Simply click what type of expense you had, enter the amount. If you had more than one expense associated with this trip, keep going. Click done when finished and you’ll find the total was added to this trip on your summary page.

There is even a place to leave notes or descriptions of each trip.

It is that simple. Really

So you have entered all your information, hey guess what you have – a trip log.

But, you aren’t done. You still need to get this to your Tax Professional so that your audit can be completed.

Back on your YTD screen there is a little printer icon on the right, click it.

Here is what the window that comes up looks like:

Something I need to point out real quick here, when you get to this point you’ll notice on the left your Tax Professionals information is there with a question asking you if you want to share this with the above listed contact. This is there because your Tax Professional sent you here to provide this service for you. He gave you his discount code. In doing so, you got a 25% discount (Your Tax Pro saving you money)

From this window you can open your report or download it.

Okay lets look at your report, there are over 150 trips.

The above picture is from a sample company, please click on the picture to give it a look. Remember our totals above, the ones you gave your preparer, the ones you “guesstimated”, notice something?

You miss guesstimated the mileage. The new information is in your favor. This is what is important.

The rest of the .pdf document that is created looks like this:

A chronological list of your trips where you went, where you went from, on what day, descriptions if you entered them. The miles of each trip and the amount of the deduction calculated for the year using that year’s mileage rates as provided by the IRS.

To me, this is the best thing you could have for the Auditor; this is explaining each mile you went, where and why. They can’t dispute the miles because they are calculated using GPS technology. Your miles are verified, you mileage expenses are logged. So not only did you prove your deduction, you showed that you under calculated your original deductions.

A few more facts you need to know as to why I think this is the best.

  • BizMile Tracker was modeled (as near as I can tell) around audits. They advertise on their website that you can go back to any year “We have all the audit years and rates you need: 2009, 2008, 2007, 2006, 2005 and more.” Through a phone call in early November with a representative I heard her mention 1998 and farther.

But there is no reason to go that far back.

  • They have all the rates figured in accordingly, even those years where we had/have to deal with a split year mileage rates.
  • They are a secure site, BizMile Tracker according to its faq, is hosted in the AWS cloud – so that is as secure as Amazon uses for its own businesses. That means SAS70 Type II audit security and ISO 27001 Level 1 service provider status certification,  professional standards
  • Although this is a great tool for those being audited, you can get it a for the year we are in, keeping track through the year is even easier. Also this option is less expensive than using the audit years program.The records are kept and are available should you need them for 7 years on BizMile servers.
  • BizMile Tracker is the only company that goes back in time for you.
  • Let’s say you made 25 trips that are identical, you can create the trip once, the software has a repeat feature allowing you to tell it what days you made those trips and it logs them all, accordingly.
  • Your busy, don’t have time to do this on your PC regularly? There is a mobile version being developed and estimated to be out some time next year (2012).
  • Don’t have that many miles to track? There is a free version – Up to $750 in deductions (or about 1400 business miles, more if you are just tracking medical and or charity mileage as these mileage rates are lower than business mileage rate.).
  • Has your Tax Professional ever told you to write down your mileage at the beginning of the year and at the end? There is a place for that too in BizMile Tracker.
  • Concerned that you may forget or not know how to use this? I encourage you to go visit their sites help videos. You can do this before you pay for any packages. AS I understand it there are several videos over at YouTube to be watched at
  • Many people believe that the IRS will use your mileage as a “tell”. Meaning if they investigate your mileage and it proves to be less than it could/should be, then so might the rest of the information you provided, leading to a much larger investigation of your return. This practice isn’t an IRS rule that is admitted by any IRS official but I know mileage has been used like this.

As a Tax Professional, I highly recommend this product. (to me they are just better)I use this product for my personal use, and I use this in my practice. If a client comes to me that has received a request for information from the IRS (Form 4564 IDR) requesting mileage documentation, BizMile is something that we now require or we will not take that Audit client.

An endnote:

This post is unsolicited and I will not or have not been compensated in any way for any information I have shared here. I use this product and I believe in this product. If you aren’t using it yearly, you could be asking for future problems.

Visit BizMile Tracker and sign up today.

Tax Professionals – there is a version of this just for us, it allows us to receive our clients records. BizMile Tracker also provides you with a discount code so your clients can save 25% off their purchase.

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IRS Announces 2010 Standard Mileage Rates

Posted by on Dec 3, 2009 in Information, Tax Preparation | 0 comments

          The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

         Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 50 cents per mile for business miles driven
  • 16.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations – They really need to adjust this.

         The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

        The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

         A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

        Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

 

The above is a direct copy and paste from the IRS Newswire.

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