When it comes to your real estate business, you may wonder how to track your miles. You need to know several things to ensure you are keeping accurate records. For example, you will need to keep track of your mileage for tax purposes. You will also want to keep track of your mileage for audit purposes.
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Tax Deductions for Real Estate Agents
Real estate agents can reduce their taxes by deducting business expenses. There are a few things to consider before making your deductions. You will need to keep detailed records and provide proof of your claims.
The tax laws are complex, so working with a professional accountant is a good idea. This will help you keep track of all your expenses and ensure you get the maximum benefits for your money. If you don’t want to do it yourself, you can hire a CPA or a tax attorney to file your paperwork.
You might have some more unusual expenses if you are a real estate agent. In particular, you might spend money on marketing and advertising your business.
Marketing and advertising expenses include signs, print materials, and property listings. They can also include sponsorships or advertising in a magazine or radio show.
Advertising is one of the most important ways to promote your business. To take advantage of the most significant tax deductions, you must ensure that your advertising expenditures are well-documented. Some everyday deductible items include signage, printing, and photography.
Aside from marketing and advertising, real estate agents can also deduct costs related to their vehicles. They may be able to claim a percentage of the costs based on how much time they spend driving. It’s also possible to deduct repairs, maintenance, and fuel costs.
Apps That Help You Track Your Miles
A mileage tracker app for realtors can help you maximize your business miles and keep up with your tax obligations. Real estate agents spend much time on the road, visiting various government buildings, mortgage lender offices, and home inspection companies. Using GPS-guided apps can help you get the most out of your miles.
Numerous apps can be used to track your miles, ranging from free to professional-level apps. While many apps automatically record your trips, you can also manually enter them into the app to save yourself some time.
The best simple mileage tracker for realtors has features that make it easy to record your daily drives accurately. These features include a drive detection feature that automatically records your dreams, a custom reimbursement rate, and the ability to edit campaigns from your computer.
MileIQ is a mileage-tracking app that uses the internet and Wi-Fi to track your drives. The application allows you to enter custom mileage rates, set work hours, and create a consolidated report. You can then use the app to send a detailed mileage report to your accountant. It can cost as little as $5.99 per month, and you can track 40 trips for free.
Everlance is another mileage-tracking app for realtors that uses GPS and credit card integration to capture your trips automatically. The app automatically detects places you frequently visit, offering a free and premium version with additional features.
IRS Requirements for Mileage Logs
Keeping mileage logs is essential if you are a real estate agent or a self-employed business owner. You can deduct the miles you drive for work if you follow the IRS’s mileage rules.
Real estate brokers typically drive more than 100 miles per day. They often go between properties. When you use a mileage log, it’s easy to calculate how many miles you move between locations.
If you’re an employer, you’ll need to tell your employees what records you will keep. You can make your mileage logs or choose an app like Driversnote. But you must make sure your mileage logs are accurate and up-to-date.
The IRS will ask for your mileage log if your business is audited. The agency has a strict set of rules to follow. These requirements include keeping up-to-date records, making them precise, and substantiating your mileage.
Using a free mileage log template can save you a lot of time. This is especially helpful if you’re trying to get reimbursed for your vehicle expenses. It can also help you calculate your deduction.
A mileage log can be a paper book or a spreadsheet. There are several formats for this record, and the IRS accepts most of them.
IRS requires you to keep your mileage log for at least three years. Make sure you’re keeping it up-to-date and completing it regularly. Keeping your mileage log up-to-date can reduce your chances of an audit.
Auditing Your Mileage Logs
If you are a real estate agent, you are required to keep mileage logs for tax purposes. This is because the IRS scrutinizes reported mileage for business use and will deny vehicle expense deductions if you fail to meet specific criteria.
Keeping mileage logs can be challenging. Knowing how to keep mileage logs to ensure you get the most tax benefits is essential.
The IRS will accept digital files or spreadsheets as long as they contain all the necessary information. Some apps can automatically track miles and generate reports. However, it’s a good idea to keep your records in a physical form for safety.
Real estate brokers typically drive over 100 miles per day. They should take advantage of the standard mileage deduction, which allows them to deduct the cost of gasoline for their vehicles. To do this, they must record their mileage starting on January 1 and ending on December 31.
Real estate brokers may be able to re-create their mileage logs after an audit. But before doing this, they must indicate to the IRS that they possess the logs.