Updated: Oct 6
With gas prices as high as they are, tracking your travel costs as closely as possible is important for your business. Consider getting a tax deduction for your business mileage.
If you drive even a little for your business, letting mileage costs slide can be an easy oversight. It can be a nuisance to keep track of your tax-deductible mileage manually, using a notebook and calculating your mileage, even with the help of a GPS. However, you could be losing significant deductions on your tax returns as a result.
Luckily, QuickBooks Online offers a painless way to track your business travel. Its Mileage tools include simple fill-in-the-blank records that allow you to document individual trips. You can either enter the starting point and destination and let the site calculate your mileage or enter the number of miles yourself in order to record your deduction.
And if you use QuickBooks Online’s mobile app, it can get even easier: with the correct settings activated, the app can track your travel automatically as you drive. Below, we share tips and tricks to take advantage of this handy feature.
To get started, open QuickBooks Online in your web browser, open the toolbar, and click the Mileage link. The screen that opens will ultimately display a table with information about your logged trips, but you'll need to complete some setup procedures first. Start by clicking the down arrow next to Add Trip in the upper right corner and select Manage vehicles. A panel will slide out from the right. Click Add vehicle.
You’ll need to supply information about your vehicles before you can start entering trips.
You’ll need to supply the vehicle’s year, make, and model. Do you own or lease it, and on what date was the vehicle purchased or leased and put into service? Do you want to have your annual mileage calculated by entering odometer readings, manually entering individual trips, or having the QuickBooks Online mobile app track your business miles driven automatically? When you’re done making your selections and entering data, click Save.
Entering Trip Data
You can download trips as a CSV file or import them from Mile IQ, but you’re probably more likely to enter them manually from your internet browser, as the process is quick and user-friendly. To add a trip, Click Add Trip in the upper right corner. In the pane that opens, you’ll enter the date of the trip and either the total miles or the start and end points. You’ll select the business purpose and vehicle and indicate whether it was a round trip. When you’re done, click Save. This trip will now appear in the table on the opening screen, and your current possible total deduction will be visible in the upper left corner, along with your total business miles and total miles.
If you want to designate a trip as personal, click the box in front of the trip in that table. In the black horizontal box that appears, click the icon that looks like a person, then click Apply. Now, this trip will appear in the Personal column and will not count toward your business tax-deductible mileage.
When you select a trip in the Mileage table, you can mark it as personal so it’s not included in your business tax-deductible miles.
Some Personal Trips Can Be Deducted, Too.
If you use your vehicle(s) for personal as well as business purposes, there are some personal trips that can also be eligible for a tax deduction. For example, for the 2022 tax year, you can deduct 18 cents per mile for your travel to medical appointments. Additionally, if you complete volunteer work for a qualified charitable organization, the miles you drive in service of your volunteer hours can be deducted at the rate of 14 cents per mile. You can also claim the cost of parking and tolls, as long as you weren’t reimbursed for any of these expenses. Obviously, the IRS wants you to keep careful records of your charitable mileage, and QuickBooks Online can provide a means to do so.
Note that QuickBooks Online doesn’t track these special personal deductions, but you’ll at least have a record of the miles driven which you can discuss with your accountant when the time comes.
Auto-Track Your Miles
If you primarily use your vehicle for business, the easiest way to track your mileage in QuickBooks Online is through the mobile app. You can launch the app and program it to automatically record your mileage as you’re driving. Then, all you have to do is add a description for the ride and mark it as a business trip. The mobile app is available for both Android and iOs devices, and it has unique features that the browser-based version of QuickBooks Online doesn't have, too, like maps, rules, and easier designation of trips as business or personal.
However, if your business mileage occurs infrequently compared to personal use of your vehicle, you may find it more time-efficient to manually enter your trips, as opposed to having to unnecessarily categorize trips as personal.
The iOS version of Mileage in the QuickBooks Online app
In both the iOS and Android mobile apps, you’ll need to open the app from your home screen and click the menu icon in the lower right corner. There, select Mileage. Make sure Auto-Tracking is turned on. Your phone’s location services tool must be turned on, too. There are device settings that vary between the two operating systems, and you should be prompted by the app to make the necessary adjustments in order for this feature to work. If you experience any trouble getting Auto-Tracking set-up, you can always search the help system of the QuickBooks Online app to make sure you get your settings correct.
While you won’t reap the fruits of your mileage deductions until you file your 2022 taxes, you can factor these savings in as you’re completing your tax planning during the year. Please let us help if you’re having any trouble with QuickBooks Online’s Mileage tools, or if you have questions with other elements of the software.