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Wednesday September 18th 2019

Never Miss Mileage Deductions Again

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.


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.

Other Uses

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.

Write Offs May Not Last Forever

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.

Can I Deduct the Cost of My Diet Program?

In this tough economy, everyone wants to minimize taxes by finding more deductions. One category of deductions for those that itemize is medical expenses. Medical expenses are entered in the first section of Schedule A of Form 1040. Along with other items like mortgage interest, real estate taxes and charitable contributions, medical expenses can reduce your taxable income. And lower taxable income means lower taxes.

So what are qualified medical expenses? The IRS defines them as expenses for the prevention or treatment of physical or mental defects or illnesses. Generally, things like doctor and dentist fees, hospital services, prescription drugs, transportation for medical care, treatment for drug and alcohol addiction, as well as various items like eyeglasses, hearing aids, wheelchairs, etc. are deductible as medical expenses.

When Weight Loss is Deductible

In some cases, costs of weight-loss programs can even be deductible. However, before writing off the costs of those Weight Watchers or Nutrisystem meals, be aware that there are some pretty strict requirements. If you are just looking to improve your health or appearance or even if a doctor recommends a weight-loss program for your overall well-being, the costs will not be deductible.

The IRS only allows deductions for these programs if they are treating a specific medical condition, such as hypertension or obesity, that has been diagnosed by a physician. This would include membership fees and meeting fees in a weight-loss program. However, gym, health club and spa dues are not deductible expenses, though separate fees for weight-loss activities can be deducted. Generally, the cost of diet foods and beverages will not be deductible because they are substituted for foods that meet normal nutritional needs.

Many Restrictions Apply

Occasionally, special foods can be deductible expenses; however, they must meet three criteria. First, they must not satisfy normal nutritional needs. Secondly, they must alleviate or treat an illness. Third, a doctor must substantiate the need for the special food. Even if foods meet all three criteria, only the cost that exceeds the cost of a normal diet is deductible.

You Must Meet the Medical Threshold First

Further, medical expenses must meet a threshold before they can be included on Schedule A; they must exceed 7.5% of a taxpayer’s adjusted gross income (AGI). So, for example, if a taxpayer’s AGI is $50,000, total medical expenses must exceed $3,750 before they can be included as itemized deductions. With the strict rules on deducting the cost of weight-loss programs and the relatively high threshold for medical expense deductions, in most cases, diet and weight-loss program expenses will not be deductible against federal income taxes. Still, for a taxpayer with relatively high medical bills who meets the IRS requirements for weight-loss program expenses, it might be worth calculating the possible deduction. Every little bit helps.