.KEYWORD trip
.FLYINGHEAD PALMPILOT FINANCE
.TITLE Track mileage easily and save money on your taxes
.FEATURE
.SUMMARY At PalmPower, we just love getting the inside scoop from the experts. Especially when it’s exclusive. It makes us especially warm and fuzzy when we can get incredibly useful inside information that helps us save money. And if we can save money by spending less on taxes, that just makes it all the more fabulous. So it’s understandable that we’re insufferably proud of this article. Shannon Pekary is the developer of a software product called Trip, which helps you track travel expenses. Understandably, he’s also an expert on ways you can reduce your taxes by tracking those expenses. In this article, Shannon tells you how you can use Trip and other travel tracking programs to save money on your taxes. Unless you like giving your good ol’ cash money to the IRS, you’d better read this article right away.
.AUTHOR Shannon Pekary
One of the first applications available for the PalmPilot helped you track your automobile mileage on your PalmPilot. I know, because I wrote it back in 1996. I originally released it as freeware on Scott’s Pilot Page (now http://www.pilot.org), one of the very first software archives for the PalmPilot, and it quickly became so popular, that I quit my job and started Hands High Software to further develop it and other solutions for the PalmPilot.
Trip was born out of my frustration with trying to keep track of my mileage in a paper journal that I kept in the glove compartment of my car. I was having the following problems:
.BEGIN_STEPS
.STEP Our family had more than one car, and I occasionally drove either one. Was I really going to get the mileage log out of the other car, or should I use two logs?
.STEP I drove for many reasons. Sometimes I drove for business, and reported the mileage on an expense sheet at work. Sometimes I drove to pick up hardware for a rental house we owned, and reported that driving as an expense of owning rental property on my taxes. Sometimes I drove as part of volunteer work, and I wanted to write that off as a donation. How was I going to keep track of all that?
.STEP I am lazy. There was no way I was going to figure out how many miles I drove for each purpose, reconciling two logs from different cars. I wasn’t going to do it, which was going to cost me money.
.END_STEPS
Trip was designed to make the tracking and categorizing mileage fast enough, and easy enough that I would actually do it.
There are now many other solutions for tracking automobile activity on the PalmPilot, which all offer various enhancements, including tracking your gas, oil and maintenance records. These include VehicleLog from Little Wing Software (see http://www.lwsd.com) and Kar Kare by Lee Golden (see http://www.geocities.com/ResearchTriangle/6608/). All of these packages can track your mileage. The key thing to remember is that you need to just do it!
.H1 Why you should track mileage
There are actually a whole lot of reasons why you might want to track your mileage using your PalmPilot. The list below hits all the major areas which the IRS will let you claim some kind of deduction:
.BEGIN_SIDEBAR
.H1 Permissible auto mileage deductions
.BEGIN_LIST
.BULLET You drive for work, and your company reimburses you for your mileage.
.BULLET You own your own business. You want to report business mileage as a business expense.
.BULLET You own rental property. You want expense the driving you do to and from the property, as well as for purposes of maintaining the property (like going to the hardware store).
.BULLET You are making a major improvement on your own property. Certain major improvements can be recorded as part of your "basis", and driving you do on behalf of that improvement can be included in your basis.
.BULLET You volunteer in a non-profit organization. Driving to and from the organization can be deducted as a donation.
.BULLET You are an officer in a non-profit organization, church or other recognized religious institution. Driving you do on church business can be deducted as a donation.
.BULLET You attend a conference as a representative of a non-profit organization, whether or not you are an officer. Your out of pocket expenses, including mileage, is deductible.
.BULLET You have high medical expenses that you deduct. Your travel expenses related to your medical expenses are also deductible.
.BULLET You are adopting a child. Travel related expenses for adoption are deductible.
.END_LIST
.END_SIDEBAR
.H1 What’s the catch?
As usual, the IRS is rather picky about how you track your mileage, and also about how you convert those miles to dollars.
.H2 Business and Rental Property Miles
If you report your mileage on an expense form for your company, it is up to your company to tell you how much it is willing to reimburse you for those miles. Usually, it is the same rate as last year’s published IRS rate.
.PAGE
If you own your own company, or own rental property, the IRS actually gives you two ways of tracking your business mileage:
.BEGIN_LIST
.BULLET Track all your mileage and all your automobile expenses, including gas, oil, maintenance and depreciation. Use your mileage records to figure out the percentage you drove your car for business. Multiply this percentage by your expenses to figure out your business related automobile expenses.
.BULLET Track just your mileage for business related purposes. Multiply your mileage by the IRS business mileage rate to compute your business expenses. The rate for 1997 miles was 31.5 cents per mile. We won’t know what this year’s mileage rate is until the tax forms are published next year.
.END_LIST
When recording business mileage, you must track your mileage, your destination, and the business purpose of each trip. You must also record the date of each leg of the trip. Figure A shows an example of correct recording of business mileage in Trip.
.FIG A This is the way to record business mileage in Trip.
.H2 Non-Profit, medical and adoption miles
For mileage that is related to non-profits, churches, medical expenses, or adoption related expenses, the IRS does not allow you to deduct the full cost of your travel, but only the gas and oil expenses. Like business related expenses, the IRS gives you two ways to do this.
.BEGIN_LIST
.BULLET Track your gas and oil expenses and all your mileage. Use your mileage records to figure out the percentage you drove your car for non-profit, medical or adoption reasons. Multiply this percentage by your expenses to figure out your related gas and oil expenses, or
.BULLET Track your mileage for non-profit, medical or adoption purposes. Multiply this by the IRS non-profit mileage rate to compute your expenses. The rate for 1997 was 10 cents per mile.
.END_LIST
The mileage, the purpose of the trip, and the name of the organization which you were representing must be recorded on every single trip for non-profit purposes! Using Trip, you can set up a category with the name of the organization. Simply putting the trip in that category will qualify it as being labeled with the name of the organization. Figure B shows the correct way to record non-profit related mileage.
.FIG B This is the way to record a non-profit trip.
Notice that the organization name is a category entered in the top right corner of the screen.
.H1 Confused?
How about an example? Lets say you record 2,000 business miles for the year and 1,000 non-profit miles. You drove a total of 10,000 miles for the year, and recorded gas, oil, maintenance, insurance, registration and depreciation expenses of $4000. Of that $4000, $1000 were gas and oil.
.H2 Method 1, actual expenses
Your business use percentage is 2,000 miles / 10,000 miles = 20%. So, business expenses = 20% X $4000 = $800.
Your non-profit use percentage is 1,000 miles / 10,000 miles = 10%. Non-profit expenses = 10% X $1000 (gas and oil only) = $100.
.H2 Method 2, using the standard deduction
Business expenses = 2,000 miles X 31.5 cents = $630.
Non-profit expenses = 1,000 miles X 10 cents = $100.
In most situations, you can use either method. However, there are circumstances that will require that you use the Actual Expense method. Consult a tax professional, or the IRS for more information.
A list of relevant tax publications is available on our Web site at http://www.handshigh.com/html/irs.html, with links to the actual publications from the IRS Web site, so you can read them for yourself.
.H1 Other benefits
Recording you mileage may have other benefits as well. For example, Patty Van Fleet is a nurse medical services consultant, and was using Trip to help sort out her reimbursable and non-reimbursable mileage, when her car was stolen.
"I was leasing a car when it was stolen and burned. I didn’t have gap insurance because my agent said I didn’t need it. Well, when it was found destroyed, the insurance adjuster was a real jerk. He started discounting for wear and tear, and the fact that MOST rental cars exceed the agreed upon yearly mileage limit (15,000/year).
"But, Trip clearly showed we were not over on miles. He had no choice. Keeping receipts for oil changes, etc. also helped. I was quite pleased with the outcome. We came out $2,000 ahead on that car after we settled our claim."
.H1 Tracking mileage in foreign countries
Using your PalmPilot to track your mileage if you live outside of the U.S. may prove even more beneficial. Many countries have different deduction rates depending on the amount of time that a journey required, in addition to the length and purpose of the journey. Reporting both mileage and journey time can be very complicated. The latest version of Trip adds the ability to track time duration.
.H1 The final word
Check with your accountant to verify that the PalmPilot application you decide on will work, and that you are using it correctly for your specific purpose. Tax laws change, and specific situations may have special tracking requirements.
But, now that you have a PalmPilot, you can’t let laziness be your excuse any more.
.BEGIN_SIDEBAR
.H1 Product availability and resources
Trip is $19.95 and is available from the Hands High Software Web site at http://www.handshigh.com/. 30-day trial versions of Trip are also available for download.
VehicleLog is $19.95 and is available from Little Wing Software. For more information, see http://www.lwsd.com/.
Kar Kare is $15.00 shareware. You can download it at http://www.geocities.com/ResearchTriangle/6608/.
For a list of relevant tax publications visit http://www.handshigh.com/html/irs.html, and surf the links to the actual publications from the IRS Web site.
.END_SIDEBAR
.BIO Shannon Pekary is president of Hands High Software and can be contacted by email at shannon@handshigh.com.
.DISCUSS http://www.component-net.com/webx?13@@.ee6c126
