IRS Raises Mileage Allowance

The IRS has raised its standard mileage rate to 58.5 cents per mile, an 8 cent boost.

This means that you can now deduct 58.5 cents on your income tax return for every mile you drive when conducting business for your travel agency. Remember that every time you drive to see a client, go to an OSSN meeting, travel to another city to attend a supplier seminar, drive to the port to take a fam cruise, go to the post office to mail business-related documents, or run any of dozens of other business-related errands, you have the right to write it off against the income generated by your business.

In an article about the change, USA Today noted that, "The vast majority of taxpayers use the standard [mileage] allowance; it's easier to calculate and doesn't require as much record keeping." I'm not sure I buy that. Seems to me you're already doing the recordkeeping.

As I recommend in my course, you will do much better if you track all your automobile-related expenses and then deduct the percentage of your total annual mileage that represents your business travel. For one thing, gas prices will just keep going up and it will take the IRS a good long while to catch up to new economic realities.

So does keeping track of all your auto expenditures require more recordkeeping? I don't see how. You have to track your mileage to take the 58.5 cent deduction anyway. So it's a simple matter of noting your odometer reading on January 1 and then again on December 31; next, add up your total business mileage and figure the percentage of total miles driven. Voila! You know how much of your total auto expenses (gas, maintenance, insurance, repairs, etc.) that you can deduct. Either way, you need one of those inexpensive mileage logsfor your car.

Since most of us now use a program like Quickenor QuickBooksto track our expenditures, finding out how much you actually spent on all deductible expenses becomes a simple tax-time exercise.

Remember, when you're a home-based travel agent, you're in business and you should run your business in a business-like manner. And as anyone who's been in business anytime will tell you, it's not how mnuch money you make that's important, it's how much money you keep! Being smart about your income tax strategies will make sure you maximize your "take-home pay."