Sticker shock at the gas pump. We’ve all been there. And while others may be curbing costs by working from home or taking mass transit, that’s not practical for construction professionals like yourself. The nature of your work can mean driving between your headquarters, different job sites, building material stores, and client meetings multiple times in a single day. Those high gas prices aren’t keeping you off the road. Instead, you’re racking up costs. But did you know that all that travel could also rack up your tax deductions?
Tracking mileage could mean tax deductions
If you’re in the construction industry and use your personal vehicle for work-related travel, you may be entitled to deduct mileage from your taxes. This deduction could save you some serious money at tax time—if you track your mileage accurately and according to strict IRS rules. One of the easiest ways to do that is to ditch the paper and spreadsheet mileage logs and use an accounting software system with a built-in mobile app that will automatically do the tedious tracking for you.
Who may qualify for mileage tax deductions?
Many types of construction industry workers are typically eligible for deducting mileage, including:
- Independent contractors
- Part-time workers
- Full-time workers
- Per diem workers
Tax deductions lower your tax liability, meaning you can keep more of your money. Who wants to pay more than they have to?
How much could you deduct?
Let’s talk numbers. How much could you deduct from your taxes by tracking miles?
This year, 2023, the IRS issued the standard mileage rates used to calculate the deductible costs of operating vehicles, including vans, pickups, and panel trucks, as $0.65.5 per mile for business.
For example, if you drove 15,000 miles for your job this year, you could deduct $9,825 on your 2023 taxes. (15,000 x $0.655)
The IRS routinely adjusts the rate for inflation. But don’t worry if you can’t keep up with the changes from year to year. The rate is automatically updated when you use accounting software and a mileage tracker mobile app. And it does all the calculations for you.
How easy is it for construction workers to track mileage for taxes?
Well, it depends on how you track them.
Using a paper log or spreadsheet? Tracking mileage may be a bit time-consuming, to say the least. You’ll have to record every trip, including:
- Odometer readings
- Total mileage
- Reason for the travel
- Where the trip started and your destination
If you don’t record your mileage at the time of travel, you’ll have to add it later. Missing trips on your log means missed opportunities for a more significant tax deduction.
The better way? Using construction accounting software with a built-in mileage tracking mobile app. This solution makes tracking trips from start to finish super simple. Just install and run the app on your smartphone, add the vehicles you use for work, allow the app to track your location, and get going. No pen or paper is required.
The app uses your smartphone’s GPS to monitor your travel. It will track all your trips automatically, so you don’t have to enter them manually. Once you reach your destination, you can easily categorize your trip as business or personal. The app will show you the miles driven as well as your potential deductions for each work-related trip. If you prefer, you can also review and categorize your trips on a web browser when you return to your computer.
The deductions are in the details…and the dashboard
With an automated mileage tracking solution, you’ll have access to a dashboard that lists all your trips. It breaks down the date and time of each trip, the location, distance, and more. You’ll also be able to view the total miles driven and your potential deductions as they add up. When it’s time to do your taxes, conveniently export your business mileage data or share your report with your accountant.
Taxes aren’t the only reason for tracking miles
A tax deduction is a pretty good incentive for tracking mileage. But here’s another one: Billing your clients for mileage. Whether you charge your client for travel expenses or factor that cost into your project estimates, knowing your mileage can help you get a more accurate idea of how much you’re spending on fuel and travel time.
Whether you’re a business owner, an employee, or self-employed, chances are you’re already tracking your time. Consider adding a mileage-tracking solution to your tools of the trade. As a construction pro, you’ve got more pressing tasks than monitoring how far you drive every day. A mileage tracking app streamlines the process and makes it effortless. With the IRS-required information at your fingertips, hopefully, you’ll be able to drive away at tax time with some extra money in your pocket.