How do you distinguish between normal mileage and work mileage? Specifically, how do you distinguish between “home-to-work/work-to-home” commuting and “work-to-site/site-to-work” commuting?
The question above was posted on LinkedIn and I figured it would be important for Quino readers to know. Not to mention, I have dealt with this problem myself when recording my mileage.
Devesh Dwivedi on LinkedIn says, “If the employee goes to a client site and the mileage is less than normal commute (normal commute being, his home to your office/ primary place of him employment) then there’s no reimbursement however, anything traveled more than the normal commute should be reimbursed.
For example, if the employee visits a client 10 miles from his home and does not come in to office that day, the 20 miles roundtrip drive of the day will not be reimbursed for (being under the normal commute 40miles round trip in your case) however, if the employee visits the client plus comes at work then miles over normal commute should be reimbursed (20 miles in this case).” http://www.linkedin.com/answers/hiring-human-resources/personnel-policies/HRH_PPO/277363-230164?searchIdx=0&sik=1258516961637&goback=%2Easr_1_1258516961637
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In addition, in my situation, I was using my car to get to and from networking events. Some days I would go to the networking event from home and then go to the office after the networking event. Adhering to the processes set by my company, I would subtract 14 kilometres (my daily commute to work from home) from the kilometres accumulated to the networking event and back to the office. The Calculation would be 30 kilometres (mileage to networking event from home) + 40 kilometres (mileage from networking event to office) – 14 kilometres (daily commute to work from home) = 56 kilometres; therefore, after my calculation I am entitled to 56 kilometres for reimbursement.
As always, consult your accountant to be informed of your company’s specific tactics when addressing this issue. OR if you want to consult the Fair Labor Standards Act (FLSA) go to http://www.opm.gov/oca/worksch/HTML/travel.asp#commtime.
-Ashton Byrne, Marketing Coordinator for Quino Solutions Inc.
This is Part 2 of 2 outlining the government’s regulations about mileage reimbursement. This week I am discussing the IRS’ regulations for mileage reimbursement.
As I have mentioned previously, instead of having to navigate aimlessly through the government’s documents… let me do the hard work for you. Below is the “need to know” about mileage deduction according to the US government.
The IRS says,
“Deductible Car and Truck Expenses
Ordinarily, expenses related to use of a car, van, pickup or panel truck for business can be deducted as transportation expenses. Use of larger vehicles, such as tractor-trailers, is treated differently and is not part of this discussion. In order to claim a deduction for business use of a car or truck, a taxpayer must have ordinary and necessary costs related to one or more of the following:
Traveling from one work location to another within the taxpayer’s tax home area. (Generally, the tax home is the entire city or general area where the taxpayer’s main place of business is located, regardless of where he or she resides.)
Visiting customers.
Attending a business meeting away from the regular workplace.
Getting from home to a temporary workplace when the taxpayer has one or more regular places of work. (These temporary workplaces can be either within or outside taxpayer’s tax home area.)
Expenses related to travel away from home overnight are travel expenses. These expenses are discussed in Chapter One of Publication 463, “Travel, Entertainment, Gift, and Car Expenses.” However, if a taxpayer uses a car while traveling away from home overnight on business, the rules for claiming car or truck expenses are the same as stated above.
It is important to note that costs related to travel between a taxpayer’s home and regular place of work are commuting expenses and are not deductible.
Taxpayers can choose to use either the standard mileage rate or actual expenses to compute their allowable business deduction. They may want to figure the deduction using both methods to see which provides a larger deduction.
Standard Mileage Rate Method
The standard mileage rate may be used to figure the deductible costs of a vehicle that is owned or leased. If a taxpayer wishes to use the standard mileage rate for a leased vehicle, it must be used for the entire lease period. In other words, a taxpayer must use the standard mileage rate for the first year a vehicle is available for business use in order to use the standard mileage rate in subsequent years.
The standard mileage rate is adjusted annually by the IRS to reflect changes in the cost of operating a vehicle. In some situations it is adjusted during the year. The 2006 standard mileage rate of 44.5 cents per mile, as well as rates for previous periods, can be found at http://www.irs.gov/taxpros/article/0,,id=156624,00.html
The standard mileage rate is used in place of actual expenses. Taxpayers who choose the standard mileage rate may not deduct actual expenses, such as depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance or vehicle registration fees. Business-related parking fees and tolls may be deducted in addition to the standard mileage rate. Fees for parking at a taxpayer’s main place of business or tolls related to commuting to and from that main place of business are personal expenses which are not deductible.
Actual car or truck expenses include:
Depreciation, Lease payments, Registration fees, Licenses, Gas, Insurance, Repairs, Oil, Garage rent, Tires, Toll, and Parking fees
These and other expenses are discussed in detail beginning on page 16 of Publication 463. If business use of the vehicle is less than 100 percent, expenses must be allocated between business and personal use. Only the business use percentage of each expense is deductible.”
If you needed more information please contact the Internal Revenue Service (IRS). Also, consult your financial advisor or accountant for your specific company processes as they may be different from what the government is offering.
- Ashton Byrne, Marketing Coordinator for Quino Solutions Inc.
There are numerous ways to bill for your travel time. Here are some strategies other business professionals are using:
- “Don’t charge for airfare, lodging, rental cars or meals UNLESS it’s an unusual engagement where you will be on-site for days or weeks at a time.” –Greg Brooks of West Third Group
- “Submit an expense report to [your client] for mileage per trip. It is one of the conditions of the rate per consultation.” –Kevin Johnson of KEVIECO LLC
- “Work [out] the details during the pre contract negotiations…adding costs after they are closed can become an embarrassing issue.” –Andy Hamer of New Mindset Business Consultants
- “Do not charge for local – commuting travel, build it into your rates. Do not charge for commuting mileage either, but keep track for tax purposes. However, for out of town travel (travel in excess of two hours) you must negotiate that up front.” – Kathleen Schneibel (Entrepreneurial Accountant)
There are other ways to bill your travel time; however, the answers above are only a few suggestions by business professionals.
If you would like to see the discussion which sparked this blog post click here
If you have another strategy that I didn’t add above leave a comment and tell everyone how you bill for travel time… lets help each other out.
-Ashton Byrne, Marketing Coordinator at Quino Solutions Inc.
YES
The IRS issues the maximum rate allowed for reimbursement, whether or not a company adheres to that rate is the company’s decision. There could be three situations:
1. An employer has a lower rate than the IRS.
What does that mean for you?
- You are not getting “jipped;” but you should claim the difference as an expense.
2. An employer has the same rate as the IRS.
What does that mean for you?
- Most employers should ask you to keep records for the company’s tax purposes.
3. An employer has a higher rate than the IRS.
What does that mean for you?
- You should claim the difference as income. In addition to keeping records for tax purposes.
The answers above should also pertain to the Canadian Revenue Agency for those Canadian readers.
*If you have any questions or concerns about mileage reimbursement rates please contact your company financial administrator, the IRS, or the CRA. Quino Solutions is not responsible for the reimbursement of any mileage expenses.
Yet, what does the HST mean for you and your vehicle expenses. It won’t effect your mileage deduction, the 52cents that you deduct per km is a flat rate; therefore, the HST shouldn’t have an effect on your mileage logging. But, there will still be an addition HST charge when servicing or fuelling your vehicle.
Fortunately, companies will be eligible to claim back 12% of tax spent. Unfortunately, consumers will have to “eat up” the additional 7% (12% HST – 5% GST).
What do you think about the HST? Leave your opinion below. Post a comment and tell the rest of Quino’s readers how you feel…
- Ashton Byrne, Marketing Coordinator for Quino Solutions Inc.
*Note: the information above was gathered from the BC government and the Vancouver Board of Trade. If you have any questions or concerns regarding the HST, please contact the BC government for answers.
Everyday thousands of business people don’t log their mileage properly or at all. Don’t miss out on tax dollars you could be receiving.
For example, if you don’t log your mileage:
I go to roughly 4-5 networking events a month and 2 sales calls a week. Therefore, according to Canadian tax legislation I am eligible to deduct roughly $200 a month (calculated with .52 cents per km traveled). If I wasn’t tracking my mileage I would be missing out on $200 a month and $2400 a year.
For example, if you log your mileage manually:
If you spend 30 seconds every time you get in and out of your car to record your starting and ending odometer reading. AND you take 4 business trips a day; 5 days a week you are spending 10 min weekly to record your mileage. 40 min monthly.
- After a week’s worth of data with the Quino MileTracer, same trips, it would only take you 3min to generate an excel report for the week. Only 12 min monthly! 60 percent less time used when automating your mileage recording, more time spent on the job.
“Get down to business. Automate your mileage recording.”
If you want to see how other people are logging their mileage go to http://polls.linkedin.com/p/58190/aewlt. And while you’re there, tell me your mileage logging strategy, if any.
“Don’t worry about it. Automate it.” Buy your Quino MileTracer today. Or, fill out a contact form to get more information.
- Ashton Byrne, Marketing Coordinator
Quino Solutions develops automatic mileage loggers to lower the tax burden for people. For a one time investment and no monthly fees Quino’s customers are able to automatically record their mileage for reimbursement and tax deduction purposes. The device stores location data that can later be viewed and exported into google maps and/or Excel.
The claim: Log your business mileage and claim accurate mileage expenses without lifting a finger! The times when you had to use pen and paper to log your mileage are long gone.
“Our research has shown that a lot of people leave money on the table because they do not want to go through the hassle of recording their mileage manually. Using our solution there are no more excuses not to record your mileage. Our device does the job for you.” -Philipp Fuhrmann, Business Development Manager
Consider this: The average self-employed person in North America drives about 15,000 km/year for business related purposes leaving the average tax deduction at $7,800 (52cts/km in Canada).
With that in mind you should think twice whether or not to log your business mileage.
Can you afford to not claim that kind of money?
-Ashton Byrne, Marketing Coordinator for Quino Solutions Inc.
> After working with Quino Solutions for the past two months I really admire the passion and intelligence used to develop the Quino MileTracer. The MileTracer is great product with a simple purpose. Claim your money. “Get down to business. Automate your mileage recording.”
An article published by eHow.com opened my eyes. “How to Keep Vehicle Mileage Tax Records” was posted 2 or 3 years ago, it opened my eyes to how complicated it can be to track your mileage with a pen and paper.
Nowadays everything is moving to digital. Why? It is easier and faster to work digitally than using any technologies of the past.
Again, throw out your log books. They aren’t worth the stress anymore. Quino Solutions’ MileTracer tracks your mileage automatically; you buy the MileTracer you buy into efficiency. According to eHow.com there are 25 steps to tracking your mileage manually:
Step 1: Get a notebook and a pen with a pocket clip. Clip pen to notebook.
Step 2: Designate a readily accessible spot in your vehicle for the notebook and pen.
Step 3: Write in the notebook the odometer reading of your vehicle every January 1 ‘ or the odometer reading on the date you begin using the vehicle for business.
Step 4: Label a file folder, “Vehicle Expenses,” and write on the folder the current year.
Step 5: Designate a handy place to keep the file folder. The glove compartment is a possible location.
Step 1: Write down the date, the number of miles driven and the business purpose for each business errand or trip, in one section of notebook.
Step 2: Continue to add each trip to the list.
… And the steps go on and on and on
How does that compare to Quino Solutions MileTracer? It takes only 4 steps to track your mileage with Quino Solutions’ MileTracer.
Step 1: Leave device in vehicle
Step 2: Plug device into PC via USB
Step 3: Filter your information
Step 4: Export to excel and add any other vehicle expenses
It is 6 times more efficient to track your mileage with the MileTracer then it is to use a pen and paper. How about that for efficiency?
- Ashton Byrne, Marketing Coordinator for Quino Solutions
Vancouver, September 11, 2009 – Quino Solutions Inc. is happy to announce the release of the MileTracer. The MileTracer enables the user to automatically record mileage for mileage reimbursement and/or tax deductions. The MileTracer is targeted at independent sales people, contractors, installers, and self employed professionals.
“Our innovative approach to mileage recording is designed to save time and money and provide our clients with an audit proof mileage log” -Chris Pinter, CEO of Quino Solutions Inc.
Get rid of that log book! Quino Solutions Inc. developed the software and hardware which will replace the log book that we all despise on a daily basis. The hardware is designed as a plug-in-and-forget solution for worry free mileage recording and reporting. Access the stored data from the device by simply connecting it to your PC via USB. The software interface makes navigation and customization of the data easy.
Get this!
Quino Solutions Inc. is the leader in mileage logging expense tools and covert tracking devices used around the world. The company’s core competency resides in the development of leading edge, low-power wireless technology. The company is privately held and currently expanding its investor base. For more information about Quino Solutions, visit the Quino website at http://www.quino.ca.
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A blog post from Quino Solutions’ old website… Worth reading
As a small business owner, reviewing costs and analyzing what is best for the company’s cash flow is at the forefront of my mind daily.
We recently hired a salesman for our company. We had never had anyone dedicated to sales before so the expenses arising were new to me.
I contacted our outside accountant and viewed the Revenue Canada website. I confirmed that the prescribed rate to reimburse an employee was 52 cents per km to cover gas, insurance and car payments etc. So I notified our salesman to keep track of his business km driven for business purposes using our “MileTracer” product. The system works beautifully. He checks his mileage report from our “MileTracer” product and reports it to me at the end of each month.
The other owner of the business reviewed the expense report and said that looks a little high to me, wouldn’t it be cheaper just to pay for a company car and pay the gas and insurance costs? Well, I had been paying about $200 a month to cover the mileage km driven. So I immediately began to create a cost benefit of the situation.
It would cost about $200 a month in car payments for a compact car. About $1,600 per year in insurance and on top of that about $100 a month is gas receipts. There is no mention in this scenario yet of car repairs and maintenance. It was clear that reimbursing by the km was a lot better for our small business as cash flow is king.
The only scenario is where a sales rep drives many km per week and is constantly on the road. If a sales rep averaged 200 km per day in driving. I had met one once who worked for McCain’s and drove constantly from one supermarket to another. They would average about 200 km (day) x .52 cents = $104 in mileage costs times around 22 days per month – this bill would be $2,288 monthly to the company. In an instance such as this with a salesman constantly on the road it definitely makes sense to foot the bill for the car payment and the insurance etc.
So, the results are if you have a salesman who just visits a few customers around town then definitely go with the mileage reimbursement based on km driven. If you do, however. have a salesman who is constantly on the road for days at a time it is definitely cheaper to go with paying for a company car.
- Natalie Pinter, VP Finance of Quino Solutions
