If you’re an independent contractor, one of your most significant tax breaks at the end of the year may come in the form of travel.
Depending on the nature of your business, it’s possible that you can receive mileage reimbursement in the form of a tax deduction.
However, too many independent contractors are sorry when tax season rolls around.
It’s typically at this time that they realize that they didn’t frequently track distance calculations.
In these situations, a mileage calculator could be quite useful.
Below, you’ll find a brief overview of why a gas mileage calculator is so critical.
Deducting Mileage From Taxes
Each year, the Internal Revenue Service allows independent contractors to deduct standard mileage rates.
- 58 cents for each mile driven for business purposes
- 20 cents for each mile driven for moving or medical reasons
- 14 cents for each mile driven for a charitable organization
When using the optional standard mileage rate, you’re not permitted to deduct any other expenses incurred from the vehicle.
So, for instance, you cannot deduct things such as oil changes or new windows.
The IRS makes the optional standard mileage rates high enough that they are supposed to cover all expenses associated with the wear-and-tear that you put on your car.
Why a Mileage Calculator Is Useful
As you can imagine, you could put thousands of miles on your car for business purposes.
However, the car that you use for your ridesharing services is the same car that you use to pick your children up from school.
The IRS allows you to deduct the miles that you used to earn business income, but it does not allow you to deduct any miles associated with the personal use of a vehicle.
You can use a mileage calculator to determine how far you drove in a day for each purpose.
Some companies may provide you with a breakdown of your online miles for the year.
For instance, Uber will send its contractors their documented online miles when they send Form 1099 at the end of the year.
However, not all companies do this.
Imagine you work as a marketing consultant, providing freelance work.
If you need to drive to meet a client, you’re not going to receive a mileage breakdown of the distance you’ve traveled.
However, you can earn mileage reimbursement in the form of a tax deduction at the end of the year.
Similarly, a mileage calculator could be useful as it could allow you to determine the best route to travel to a client.
For instance, let’s say the marketing consultant lives in Boston and needs to go to New York to meet with a client.
The individual is trying to decide whether it’s better to drive or fly to New York.
The consultant begins by looking up flight schedules.
He or she would likely choose the cheapest flight available.
The cost of the flight is tax deductible since it was for business purposes.
Then, the consultant could use a mileage calculator to determine the cost of driving to New York and back.
Not only would the mileage calculator provide the consultant with anticipated fuel and toll costs, but it would also give the expected mileage reimbursement as well.
The consultant should then subtract fuel and toll costs from the expected mileage reimbursement.
So, for instance, the plane ticket could cost $350.
The starting point in Boston to the ending point in New York is roughly 215 miles, or 430 miles round trip.
The mileage reimbursement from the IRS for a 430-mile trip is $249.40.
The consultant also can expect about $30 in tolls.
So, the distance calculator revealed that the total cost of driving is about $280 while the price of a flight is $350.
Which Mileage Calculator Is Best?
When searching online, you’ll find that there are numerous mileage calculators available.
Below, you’ll find a breakdown of some of the most popular.
Google Maps is one of the most useful tools for driving directions, but did you know that it also serves as a helpful mileage calculator?
Customers can use Google Maps to measure straight-line distance and total distance traveled.
You can quickly change your route on Google Maps to account for things such as scenic routes or shortcuts you took to bypass construction.
MapQuest is similar to Google Maps in that it provides driving directions and expected expenditures.
However, if you travel outside of North America for business, you may find MapQuest easier to use.
MapQuest provides driving directions and mileage calculations in miles, whereas Google Maps provides them in kilometers.
AAA provides its customers with a TripTik Planner, an interactive tool that allows you to log and save driving trips.
The company uses a Fuel Cost Calculator, which allows you to pinpoint your expected fuel expenditures based on your car’s:
- Year of production
If you have a navigation system in your car, you may find that it can automatically track miles from point A to point B.
Furthermore, many of today’s smartphones come with location tracking.
If you turn on the “Location” setting in your phone, it may automatically track the areas to which you travel.
This could be particularly useful for rideshare drivers, who use GPS when picking up and dropping off customers.
Even though services like Uber may provide you with a breakdown of the miles you’ve spent online for the year, it could be useful to keep personal records as well.
For instance, let’s say you are based in California and pick up a rider going to Las Vegas.
After dropping the individual in Las Vegas, you head back to California.
You don’t want to pick up any other passengers along the way, so you turn your rideshare app off.
Once you arrive in California, you immediately begin picking up customers again.
You could expense the mileage that you drove from Las Vegas to California, even though your rideshare app did not recognize you as being online.
So, having a backup could end up providing you with even more of a tax reimbursement.
Airline Mileage Calculators
If you’re someone who travels via air for work, you may want to use an airline mileage calculator.
These tools allow you to plug in various airport codes so that you can determine how many frequent flyer miles you’ll receive.
You can then compare the different airline programs to determine which will provide you with access to the most bonus miles.
Using an airline mileage calculator could allow you to determine whether it’s in your best interest to drive or fly to a meeting.
If you choose to fly, an airline mileage calculator could allow you to determine which airline is best to take.
Take, for instance, the mileage calculator from WebFlyer.
This calculator allows you to enter the airport codes for multiple legs of a trip.
Then, you can add information about your airline’s frequent flyer miles, such as whether there is an:
- Elite Bonus
- Class of Service Bonus
- Special Promotion Bonus
Lastly, you’ll then put in the price of the airfare.
By entering this information for multiple airlines, you can quickly determine how you should book your ticket to most maximize your rewards.
Also, when comparing frequent flyer programs, you should remember that most airlines don’t provide rewards on a 1:1 basis.
Many people incorrectly assume that one earned mile is the same as one “air” mile, but this is not the case.
For instance, 1.6 points from the Southwest Rapid Rewards program is worth $.01.
If you’re going to be traveling for work frequently, taking the time to use an airline mileage calculator could allow you to pick your go-to airline so that you can begin to accumulate points and build status.
Use a Mileage Calculator to Optimize Business Efficiency
One of the most significant mistakes that freelancers make is failing to recognize how many tax deductions they can take.
Using tools like an ultimate mileage calculator can put them in the best position for success.
Mileage calculators can save money on expenses, allow them to budget their funds, and allow them to maximize their tax deductions.
If you earn self-employment income, be sure to use a mileage calculator to optimize your business efficiency.