If any part of your work involves driving business miles that can be deducted on your income taxes, you will want to know about a QuickBooks Online feature: mileage tracking. You can record trips either manually or automatically, and the software will calculate your deductions. Here is how it works.
Tracking Trips Manually
Before you get started, you will want to create a record for the vehicle you will be using. Click Mileage in the navigation toolbar. Hover over the green Add trip button in the middle right of the screen, and click View Vehicles. Click Add vehicle and complete the fields on the screen that opens. Click Save. Back on the main screen, click directly on Add trip. The New trip panel will slide out from the right.
Enter the Date, then the number of miles driven (Distance). If you would like, you can enter the Starting point and Ending point for your records. Click either the Business or Personal icon and enter a Description. Select the correct Vehicle if you use more than one and click Save. Your trip will now appear on the main screen with your tax deduction already calculated, as pictured below. Click the More button at the end of the row, and you will be able to Edit your trips and Duplicate them.
There is another way to track your trips, one that does not involve writing down your odometer readings or mileage. The QuickBooks Online mobile app will automatically track your miles as you drive.
To set this up, open the app and click on the three horizontal lines in the lower right to open the app’s navigation shortcuts. Then click the Mileage icon. Auto-tracking is off by default, so you’ll have to click OFF to open the Mileage settings screen. Click the Auto-tracking button to change it from grayed-out to green. In the small window that opens, click Settings to go to the QuickBooks section of your phone’s Settings screen and make these changes:
- Location must be Always On.
- Motion & Fitness must be On.
- Background App Refresh must be On.
- Cellular Data must be On.
Close this screen and return to the QuickBooks Online app’s main Mileage screen after you have changed your settings. Auto tracking should be ON. Click the + (plus) sign in the lower right, and then Create trip. The app will automatically detect your starting and stopping locations using your phone’s GPS. When you have arrived at your destination, open the Mileage app again.
Swipe left on the trip’s record to categorize it as business and right to mark it personal. Enter the trip’s purpose if it is a business trip and click Save. You will now need to turn off Auto-tracking and reverse the changes you made in your phone’s Settings (unless, of course, you normally leave any of them on).
We encourage you to have a discussion with your tax preparer to make sure the mileage deduction is best for your business and you are capturing all the tax deductions allowed.