Now is the Time to Record Odometer Readings

The end of each new year means it’s time for family child care providers to record the odometer readings for each car, truck or van you use in your business.

Record your odometer reading as of December 31st. File this information with your 2020 tax records.

Next, record the odometer readings as of January 1st for the upcoming year and file this with your next year tax records.

You want to record odometer readings at the beginning and end of each year so you can calculate the total number of miles you drove your vehicle in the year. This will be used to help determine the percentage of miles you drove for business purposes each year.

If you use the standard mileage method of claiming vehicle expenses you can also deduct this business percentage of your vehicle loan interest and vehicle property tax (if your state has this tax).

If you use actual mileage method of claiming vehicle expenses you can deduct the business percentage of all your vehicle expenses (gas, oil, repairs, insurance, vehicle depreciation, loan interest, and so on).

If you didn’t record the odometer reading of your vehicle on January 1, 2020, try to estimate it. If you serviced your vehicle close to this date, look on the work invoice where the odometer reading may be recorded.

Or, you can always take the total number of miles you have driven the vehicle since you owned it and divide it by the number of months you’ve owned it. Multiply this average monthly mileage by 12 to estimate your mileage for the year.

Vehicle deductions can add up quickly so it pays to keep accurate odometer readings each year.

Tom Copeland – www.tomcopelandblog.com

Image credit: https://www.allenstewart.com/odometer-disclosures-and-how-they-work/

For more information, see my Family Child Care Tax Workbook and Organizer.