If you own a small business or are an employee with business mileage, you know that the mileage deduction can save you money on your taxes. The rate is going up in 2011 to 51¢ per mile, making it an even more lucrative deduction. However, keeping track of mileage can be a hassle; forgetting to record trips, having to guess at mileage and keeping up with written logs can be time consuming and stressful. There’s a handy little gadget that can take those problems off your hands; it’s called CarCheckup, and it makes keeping up with mileage virtually painless.
Plug It In and Go
The device is very small and lightweight; all you do is plug it into the onboard diagnostic port in your vehicle and it automatically records your trips. Any car made in 1996 or later will be equipped with the port. It tells the date, the start and stop time of each trip and miles driven. You download the data into your computer using Excel or the CarCheckup software; from there you can enter a purpose for each trip, whether business or pleasure, and record notes about each trip if you desire. It even allows you to create customized reports. It takes the stress out of providing documentation for the IRS as well; Jennifer Funkhouser, co-founder of CarCheckup, points out that it provides all the documentation necessary.
Besides tracking business mileage, the CarCheckup has other useful features as well – it can be used to monitor teen driving since it tracks time idling, time spent at different speeds, acceleration, hard breaking, etc. It also reads trouble codes in your car’s computer and provides an explanation if your car’s engine light comes on. The $150 price tag for the device seems more than fair for the time and effort you will save and should even pay for itself over time since you will not miss mileage deductions anymore.
Deduction May Not Last
Take advantage of this and other deductions while you can, though. If the Obama administration has its way, many tax deductions may be reduced or phased out in an effort to reduce the nation’s spiraling deficits. President Obama recently announced that he wants to limit itemized deductions for the wealthiest 2% of Americans; he also wants to reform the tax code. He wants tax reform, both individual and corporate, “that closes loopholes and produces a system which is simpler, fairer and not rigged in favor of those who can afford lawyers and accountants to game it.”
The president supports his Fiscal Commission’s recommendations, one of which would eliminate all deductions and credits. Another option being tossed around is setting a trigger to limit popular tax deductions until Congress can get legislation enacted to reform the code. The administration has stated that everything is on the table with regards to fiscal reform, so it’s likely that we could see reductions or eliminations of such deductions in the future. Until then, continue to take advantage of every tax break available before they disappear.
Cheryl Johnson is a part-time writer who loves to help others save money. If you are interested in having Cheryl write for you, find her at textbroker.com under Cheryl24.