Tax On Mileage: How Do You Claim Gas Mileage on Tax Return?

If you are a small business owner or a self-employed individual, you probably hunt for every possible tax deduction when tax season comes around. 

From your Instagram advertising fees to office supplies, most business expenses are tax-deductible, and if driving is a necessary part of your job, you may be able to deduct the driving expenses on your federal income tax return, including gas. 

In this blog, we’ll help you understand whether you’re eligible for the gas deduction and how you can claim it on your tax return. 

Let’s dive right in. 

What is the mileage tax deduction?

Gas is a small part of a bigger deduction category—that is, mileage. 

Mileage tax deduction refers to what you can claim from using your vehicles for business-related purposes on your tax return. So, for example, if you’re a self-employed taxi driver, all miles you drive for work are deductible, no matter how many. However, if you also use that car to take your family out for a summer trip, you must exclude those miles when filing tax deductions. 

So, the golden rule here is that only work-related mileage can be written off. That being said, there are also other conditions you need to meet to qualify for the mileage tax deduction, depending on which deduction method you opt for. 

Read more: How You Can Benefit From Mileage Tax Deductions.

Mileage tax deduction methods 

There are two approaches to writing off your mileage: the standard and the actual expense method. If you want to deduct what you actually spent on gas, you’ll need to choose the latter option. 

We’ll give you a quick overview of both methods below.

The standard mileage method 

This method is very simple to follow. The IRS only requires you to maintain a log of qualifying driven mileage, which means you must have a mileage tracker to record date, destination, business purpose, starting and ending odometer readings, and total mileage for each business trip. You can use Shoeboxed’s mileage tracker for free!

The deduction rate of the standard mileage method for this current year is 58.5 cents per mile. So if you have 5,000 driven miles for business purposes, you end up with a write-off of $2,800. 

You won’t be able to deduct gas expenses with this method because the IRS already included gas in the standard rate (58.5 cents.)

The actual expense method 

With this method, you need to keep records of your vehicle’s expenses, including gas, oil, repairs, tires, insurance, registration fees, licenses, etc. Once you get the total expense, multiply that sum by your business-use percentage. For instance, in 2021, you drove 20,000 miles in a year, with 5,000 of those being business miles. That means your business-use percentage for your car would be 25%.

Step-by-step guide: How do you claim gas mileage on your tax return? 

So, only with the actual expense method can you write off your gas cost. Let’s find out how you can claim it on your taxes. 

Step 1: Keep your receipts 

You do not have to keep track of or log your mileage if you pick the actual expense deduction. However, the IRS requires you to save copies of any necessary receipts and relevant documentation instead. In this case, that means your gas receipts.  

If you fail to store your receipts properly to submit to the IRS, you will need to:

  • Provide your own written or oral statement containing specific information
  • Submit other supporting evidence, such as written statements or oral testimony from a third party

As you can already see it’s quite a hassle if you don’t have receipts, so the best thing you can do is to not let that happen. Shoeboxed can help you with that! Shoeboxed is a receipt organizer app that can help you digitize and categorize your receipts securely in the cloud. It will take your headaches and worries of losing receipts or damaging them, and give you back peace of mind. 

Step 2: Calculate your total deduction

Once you have all receipts available at hand, it will be very easy to figure out what you have spent on gas throughout the year. Then, add your gas expenses with other costs needed to operate your vehicle. Lastly, multiply that grand total by your business-use percentage (if any), which we explained earlier in section 2.  

Following those steps will give the number you need in step 3. 

Step 3: Claim your gas deduction on your tax return 

There’s no separate part for each deduction method—whether you take the standard deduction or actual expense method, you will enter your calculated total deductions on line 9 of Schedule C (Form 1040)

Source: The IRS 

With the actual expense method, you can also fill in your deductible depreciation amount on line 13 and rent or lease payments on line 20a.

Step 4: Retain your receipts and documents 

You must retain your gas receipts and other relevant documents at least three years from the date you file your tax return. Again, you don’t want to waste a lot of time and space organizing and storing a bunch of receipt papers. That’s why you should consider using advanced technology apps like Shoeboxed to easily get this done. 

The bottom line 

Though the actual vehicle’s expense method is more complicated to apply, it can sometimes help you save much more money on taxes than the standard deduction method, especially with  gas prices rocketing recently. 

We hope with the detailed guideline above, you can have all car-related expenses successfully deducted. 

Find more financial articles on the Shoeboxed Blog


About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease.

Shoeboxed ensures you always have your receipts securely stored and ready for tax purposes. More importantly, Shoeboxed helps you track mileage using your phone’s built-in GPS for unmatched ease and accuracy. Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

How to Get Bookkeeping Clients: An Easy Step-By-Step Guide

Whether you’re a newly minted entreprenåeur diving into the world of freelance bookkeeping or a seasoned bookkeeper looking to grow your business, finding clients can be a tough job. This is especially true following the long-term impacts of the COVID-19 pandemic, which drove a majority of businesses online and left many bookkeepers scrambling to develop their online presence.

But don’t be discouraged! Building up your client base may seem like an impossible task at first, but with the right tools under your belt, you’ll be attracting new clientele in no time. Today we’ll take you through the best strategies to get new bookkeeping clients.

Five easy steps to get bookkeeping clients

Step one: Identify your audience

Before you can start your search, you’ll need to know what kind of client you’re looking for. Identifying your target market will not only help you find your most ideal clientele, but also help them find you in the long-run!

To do this, you’ll need to decide whether you are looking to specialize in a specific industry or provide services to a more general client base. There are benefits to both – sticking to a specific niche service (i.e. payroll) or industry (i.e. retail stores, restaurants) helps potential clients determine whether you are the right fit for them, while remaining in the generalist pool widens your scope of prospective business.  

Step two: Develop your online presence

There are a plethora of social media platforms available to help craft your online presence, so how do you choose which one is right for your freelance bookkeeping business?

Facebook

We recommend you start with Facebook. Facebook offers a number of great tools to support freelance business owners. If you haven’t already, you’ll want to take a moment to check out Facebook Business Pages. You can use your page to promote your service offerings, share useful bookkeeping tips and relevant posts, and grow your following.

If you already have existing clients, it’s a good idea to encourage them to visit your page and leave a review – it will help generate positive feedback about your services and attract new business. Make sure you also include links to any other social media platforms or external websites where new and existing clients can find you in the “About” page.

LinkedIn

Another great resource is LinkedIn, otherwise known as the world’s leading business social networking site. With over 722 million users, there are many reasons why LinkedIn is the go-to site for professionals looking to build their network. Help clients find you by interacting on posts and in relevant groups, or take the first step and reach out to potential clients to introduce yourself. If you’re having trouble getting started, Hootsuite has a great guide to help you create an attractive page.

You may also want to look into creating a Twitter, blog, podcast or YouTube channel where you can share helpful bookkeeping knowledge and tips, showcase your skills and establish your reputation as an expert. And don’t forget to re-share your content on your other social media pages!

Step three: Get certified with an accounting software

In the world of freelance bookkeeping, it’s difficult to stand out amongst the thousands of other qualified professionals out there. Set yourself apart by getting certified by your accounting software of choice. Most people will be familiar with QuickBooks, so we recommend joining the QuickBooks ProAdvisor program. This is a completely free way to let your clients know that you’re an expert user of QuickBooks’ products. Being added to QuickBooks’ Find-A-ProAdvisor Directory will also help generate a few leads every month.

Step four: Network with professionals

The struggle to find clients isn’t unique to bookkeeping – all professionals in the service industry will go through this at some stage in their career. This also means that all professionals will likely understand the value of a referral. By building relationships with local professionals in similar or complementary industries, you will open yourself up to an even wider avenue of opportunity.

Once you’ve made the connection, what comes next is totally up to you:

Offer to trade referrals – Perhaps your new professional connection knows someone looking for a freelance bookkeeper. You can repay the favour next time – working together to grow your business is a win-win strategy!

Offer subcontracting – If you’re starting out and looking to gain some experience, reach out to some well-known local bookkeepers and offer to take on some of their workload. This is a great way to get your name out there and potentially find your first client.

Offer referral incentives – You may want to reach out to professionals and offer complementary services in order to give them a taste of your offerings. Satisfied clients are likely to want to spread the word of your great work within their own networks – especially if you offer discounts or additional services in return.

Step five: Attend public speaking events

A great way to establish your credibility and build your reputation as a reliable bookkeeper is to share your expertise at business-related events such as conferences, seminars, business training sessions, trade shows, and webinars. Public speaking may feel intimidating at first – but fear not. If you start by volunteering for smaller guest-speaking opportunities, you can gradually grow your presentation skills until you feel ready to attend larger-scale conferences.

If you enjoy public speaking, we also suggest starting your own webinar. You’ll want to speak on relevant topics that you have experience in. For example, you may want to educate your audience about receipt management – a task that can easily get out of hand without the right tools. This is the perfect chance to introduce and walk your clients through any useful, bookkeeping-related software applications, such as Shoeboxed — a receipt management application that turns your receipts and business documents into digital format. This will not only help your clients manage their own businesses easier, but also streamline your bookkeeping process in the future!

Once you’ve chosen a topic, make sure you do your research, include numerous interactive opportunities and create engaging visuals so your audience will want to attend your future events. To garner an audience, reach out to your existing client network and promote your event on your social media pages. This is a great (and free!) opportunity for current and future clients to tap into your expertise.

Get started – Start searching for new bookkeeping clients!

Phew – you made it to the end of our guide! With all of these strategies in hand, you’re almost ready to take on the task of getting new clients for your freelance bookkeeping business. Before you embark on your journey to success, we want to remind you that you do not need to use every method we’ve suggested – especially not all at once!  You also don’t need to do steps 2 to 5 in order.

Give this article another read, think about which methods will work best for your business goals and then, when you feel ready, get the ball rolling. You can do this!


About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease.

Shoeboxed ensures you always have your receipts securely stored and ready for tax purposes. More importantly, Shoeboxed helps you track mileage using your phone’s built-in GPS for unmatched ease and accuracy. Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

How to Use Quickbooks Online Accountant: Learning Steps, Tips, and Resources

If you are a QuickBooks user, you would probably have heard of QuickBooks Online Accountant, the new feature that allows users to access and enjoy your ProAdvisor benefits, manage and handle QuickBooks Online clients, and cooperate with other company members.

In this article, we will introduce this feature in detail, from what it is to how it can benefit your business and how to use Quickbooks online accountant. We’ll also share some helpful bonus tips and learning resources to make the most out of this feature. 

What is QuickBooks Online Accountant? 

QuickBooks Online Accountant is a cloud-based accounting management software. It helps bookkeepers and accountants compile client transactions, review their books, and make adjustments. This program is free for accounting professionals, and when you sign up, you’re eligible to join in the QuickBooks Online ProAdvisor program. QuickBooks Online Accountant features bookkeeping for your company built around QuickBooks Online Advanced and client tools, making it a one-stop software to meet all your bookkeeping needs.

How using QuickBooks Online Accountant benefits your business

QuickBooks Online Accountant provides users with a comprehensive range of benefits, from enjoying ProAdvisor benefits, managing and handling QuickBooks Online clients, and cooperating with other teammates from anywhere. Whether you need to work with clients in the cloud or look for accounting courses and certification, the feature can meet all your business requirements. 

How to use QuickBooks Online Accountant

To help you better visualize how to use QuickBooks Online Accountant, we’ve listed some helpful tutorial videos below: 

Introduction to QuickBooks Online Accountant
QuickBooks Online Complete Tutorial

You can also have a look at the QuickBooks Online Accountant guideline that explains each task thoroughly and provides detailed illustrations for each process. 

You might also be interested in: 

QuickBooks Online Accountant tips and tricks

Use ProAdvisor

The QuickBooks Intuit Package comes with the ProAdvisor feature, which connects you with a local accountant (depending on your location) to help you get up and run the software if needed. You can also consult them on issues like tax requirements, offset expenses, and business structure.

Reconcile on QuickBooks

One of the essential QuickBooks tips that simplify your work is constant reconciliation. By reconciling your accounts regularly, you always have a broad view of your financial situation. You can simply check that a statement or payment remittance matches your QuickBooks whenever you receive one. This includes all statements, including those for bank accounts, credit cards, and loans.

Secure your data with QuickBooks

Securing your data is as integral as running your business. And QuickBooks can help you with that! With QuickBooks Online, you can set up an automatic schedule to back up your data on the cloud system or have it backed up automatically. Otherwise, you can integrate QuickBooks with your backup solution for extra security.

Customize your QuickBooks layout

The latest version of QuickBooks offers users a customizable interface. If you are more familiar with the previous layout or simply want to create an interface that suits you best, all you need to do is go to Edit>Preferences>Desktop View. 

Set up memorized transactions

A simple practice that can make your work much simpler and faster is to set up memorized transactions on QuickBooks. You can utilize these to pay monthly bills or send off monthly invoices to your clients, which can help you save a lot of time and effort and avoid making mistakes. To enable that feature, click on Lists>Memorized Transaction List>Memorized Transaction>New Group and set up the transactions you want to memorize.

QuickBooks Online Accountant learning resources and certification

Besides providing users with a helpful accounting tool, QuickBooks Online Accountant offers professional training for future accountants and bookkeepers. Users can choose to learn from videos, webinars, virtual conferences, and in-person events to improve their knowledge and skills and gain confidence from first-hand experience. 

QuickBooks Accountant University

QuickBooks Accountant University is a step-by-step program that offers users flexible courses and concrete results in bookkeeping and accounting. This program provides free access to actionable, live training lessons taught by Advanced Certified ProAdvisors and all the study materials you need in your learning. 

Moreover, you can pick your favorite learning method, from webinars to virtual conferences to in-person events, and earn CPE (Continuing Professional Education) credits. 

You can check upcoming events and on-demand training here

QuickBooks Certification

QuickBooks Online Accountant offers accounting professionals free training, exams, and certification. Through exams, you can gain valuable skills to provide better services for your clients and earn credentials that keep your practice growing as well. 

You can find exams and get your certifications here

The bottom line

QuickBooks Accountant gives accountants and bookkeepers an amazing opportunity to improve their performance. The feature helps users collaborate with other teammates and clients better, keep the information up to date, and maintain a seamless process for bookkeepers and accountants. It can increase productivity, reduce errors and fraud, and maximize companies’ resources in the long run.

Don’t forget to subscribe to the Shoeboxed blog for more helpful accounting information, tools, learning resources, and best practices for accountants and small businesses! 


About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!